On January 1, Year 8, Shuswap Inc. and Kalamalka Inc. formed a new joint venture, Okanagan Inc. Shuswap contributed equipment with a book value of $900,000 and a fair value of $2,100,000 for a 50% interest in the joint venture On December 31, Year 8, Okanagan Inc. reported a net income of $612,000. The equipment transferred has an estimated useful life of 20 years. Ignore taxes. Assume the transaction does not have commercial substance because Shuswap Ltd. owned a similar portion of the same type of equipment both before and after the contribution to the joint venture. Calculate the gain on the contribution of equipment and prepare the journal entries for Shuswap Inc. to record the events on January 1 and December 31, Year 8, including Shuswap's share of profit.
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- On 01 July 2021 Ocean Ltd sold an item of equipment to Creek Ltd for $820,000 cash. The original cost of the equipment was $950,000. Ocean Ltd adopted an accounting policy whereby equipment was being depreciated on a straight line basis over its useful life of 8 years. The carrying amount of the equipment in Ocean Ltd financial statements at the date of sale was $520,000. Subsequent to the transfer, Creek Ltd depreciated the equipment on a straight line basis over its remaining useful life of 5 year S. Required: Fill in the missing amount for the following accounts that will appear in the consolidated adjusting journal entries for the group for the year ended 30 June 2022: Gain on Sale will be debited by $ Deferred Tax Asset will be debited by $ A depreciation adjustment will be recorded by a credit to Depreciation expense of $Information concerning Blue Corporation's intangible assets is as follows. On January 1, 2025, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $100,000. Of this amount, $20,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $20,000 each, beginning January 1, 2026. The agreement provides that the down payment is not refundable and no future services are required f the franchisor. The present value at January 1, 2025, of the 4 annual payments discounted at 15% (the implicit rate for a loan of this type) is $57,100. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue's revenue from the franchise for 2025 was $870,000. Blue estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) Blue incurred…During the current year ending on December 31, BSP Company completed the following transactions: a. On January 1, purchased a patent for $26,000 cash (estimated useful life, five years). b. On January 1, purchased another business for $160,000 cash, including $12,000 for goodwill. The assets included accounts receivable with a fair value of $12,000 and property and equipment with a fair value of $136,000 (with a residual value of $14,280 and estimated useful life of 10 years). The company assumed no liabilities. Goodwill has an indefinite life. c. On December 31, constructed a storage shed on land leased from D. Heald. The cost of the shed was $17,600. The company uses straight-line depreciation. The lease will expire in five years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $4,800 during the current year. e. On December 31 of the current year, sold Machine A for $7,200…
- During the current year ending on December 31, BSP Company completed the following transactions: a. On January 1, purchased a patent for $28,000 cash (estimated useful life, seven years). b. On January 1, purchased another business for $164,000 cash, including $10,000 for goodwill. The assets included accounts receivable with a fair value of $12,000 and property and equipment with a fair value of $142,000 (with a residual value of $15,000 and estimated useful life of 10 years). The company assumed no liabilities. Goodwill has an indefinite life. c. On December 31, constructed a storage shed on land leased from D. Heald. The cost of the shed was $15,600. The company uses straight-line depreciation. The lease will expire in three years. (Amounts spent to enhance leased property are capitalized as intangible assets called Leasehold Improvements.) d. Total expenditures for ordinary repairs were $5,500 during the current year. e. On December 31 of the current year, sold Machine A for $6,000…Information concerning Sandro Corporation's intangible assets is as follows. 1. On January 1, 2020, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $75,000. Of this amount, $15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is $43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro's revenue from the franchise for 2020 was $900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.) 2.…On December 31, 2024, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $12 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the following additional information. • The book value of the assets of the segment at the time of the sale was $10 million. • The loss from operations of the segment during 2024 was $3.7 million. • Pretax income from other continuing operations for the year totaled $5.9 million. • The income tax rate is 25%. Prepare the lower portion of the 2024 income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4. Answer is complete but not entirely correct. CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2024 Income from…
- On December 31, 2021, the end of the fiscal year, Revolutionary Industries completed the sale of its robotics business for $10.0 million. The robotics business segment qualifies as a component of the entity according to GAAP. The book value of the assets of the segment was $7.5 million. The income from operations of the segment during 2021 was $4.5 million. Pretax income from continuing operations for the year totaled $12.5 million. The income tax rate is 25%. Prepare the lower portion of the 2021 income statement beginning with income from continuing operations before income taxes. Ignore EPS disclosures. (Amounts to be deducted and negative amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example, $4,000,000 rather than $4.)On December 31, 2024, the end of the fiscal year, California Microtech Corporation completed the sale of its semiconductor business for $15 million. The semiconductor business segment qualifies as a component of the entity according to GAAP. Consider the following additional information. • The book value of the assets of the segment at the time of the sale was $12 million. • The loss from operations of the segment during 2024 was $4.5 million. • Pretax income from other continuing operations for the year totaled $6.6 million. • The income tax rate is 25%. Prepare the lower portion of the 2024 income statement beginning with income from continuing operations before income taxes. Note: Loss amounts should be indicated with a minus sign. Enter your answers in whole dollars and not in millions. For example. $4,000,000 rather than $4. CALIFORNIA MICROTECH CORPORATION Partial Income Statement For the Year Ended December 31, 2024 Income from continuing operations before income taxes Income…Information concerning Blue Corporation’s intangible assets is as follows. 1. On January 1, 2020, Blue signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of $57,500. Of this amount, $11,500 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $11,500 each, beginning January 1, 2021. The agreement provides that the down payment is not refundable, and no future services are required of the franchisor. The present value at January 1, 2020, of the 4 annual payments discounted at 10% (the implicit rate for a loan of this type) is $36,450. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Blue’s revenue from the franchise for 2020 was $840,000. Blue estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.)…
- Tourmalet sold an item of plant for $50 million on 1 April 20X4. The plant had a carrying amount of $40 million at the date of sale, which was charged to cost of sales. On the same date, Tourmalet entered into an agreement to lease back the plant for the next five years (being the estimated remaining life of the plant) at a cost of $14 million per annum payable annually in arrears. An arrangement of this type is normally deemed to have a financing cost of 10% per annum. What amount will be shown as income from this transaction in the statement of profit or loss for the year ended 30 September 20X4?In the current year, Company A made the following cash purchases: 1. The exclusive right to manufacture and sell equipment from Company B for $203,000. Company B created the unique design for the equipment. Company A also paid an additional $11,500 in legal and filing fees to attorneys to complete the transaction. 2. An initial fee of $260,000 for a three-year agreement with Company C to use its name for a new facility in the local area. Company C has locations throughout the country. Company A is required to pay an additional fee of $5,300 for each month it operates under the Company C name, with payments beginning in March of the current year. Company A also purchased $403,000 of equipment to be placed in the new facility. 3. The exclusive right to sell a book, for $22,000. Required: Prepare a summary journal entry to record expenditures related to initial acquisitions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account…Information concerning Adnan Corporation’s intangible assets is as follows. (a) On January 1, 2019, Adnan signed an agreement to operate as a franchisee of Hamed Copy Service, Inc. for an initial franchise fee of R$95,000. Of this amount, R$19,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of R$19,000 each, beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2019, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is R$55,350. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Adnan estimates the useful life of the franchise to be 10 years. (b) Adnan incurred R$85,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2019. Legal fees and other costs associated with…