Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Chapter 11, Problem 3SSC
Surfing the Standards Case 3: Involuntary Conversion, IFRS
Ed’s Market Company (EMC) grows and sells fresh fruits and vegetables EMC is an IFRS reporter EMC experienced three different unfortunate events in the current year
- 1. 1 In February, the government acquired 20 acres from EMC m an eminent domain case EMC was carrying the land on its balance sheet at $6,000. The government paid EMC $10,000 EMC purchased an additional 20 acres of land on the other side of its farm for $25,000 in June to compensate for this loss
- 2. 2 In July, a fire destroyed one of EMC’s barns. The barn had an original cost of $200,000 and
accumulated depreciation of $120,000. EMC expected to receive $50,000 in insurance money. EMC received insurance proceeds of $50,000 in November. - 3. 3 In December one of EMC’s tractors was stolen The original cost of the tractor was $45,000 and the accumulated depreciation was $42,500. The tractor was insured but as of December 31, it was not determined exactly how much the insurance company would pay EMC, although it is likely to be around $5,000.
Prepare a memo to the file using the international standards for support. Include any necessary
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Note : Please answer part B and Part D only, thanks
Deliveries Ltd leased a truck from a truck dealer, City Vans Ltd. City Vans plc acquired the truck at a cost of $196,000.The truck will be painted with Deliveries Ltd’s logo and advertising and the cost of repainting the truck to make it suitable for another owner four years later is estimated to be $56,000. Deliveries Ltd plans to keep the truck after the lease but has not made any commitment to the lessor to purchase it. The terms of the lease are as follows: • Date of entering lease: 1 July 2019. • Duration of lease: 4 years. • Life of leased asset: 5 years, after which it will have no residual value. • Lease payments: $116,000 at the end of each year. • Interest rate implicit in the lease: 10 per cent. • Unguaranteed residual: $66,000. • Fair value of truck at inception of the lease: $412,786. Required:
(a) Demonstrate that the interest rate implicit in the lease is 10 per cent.
(b) Prepare the journal entries to account for…
Steve has a manufacturing business In the current year, his storage building is destroyed by fire It had an adjusted basis of $75,000 He received $300,000 from the insurance company and elected to replace the building under the involuntary conversion provisions He built a new storage building for $350,000
What is the basis of the new storage building
a$150,000
b$125,000
c$100,000
d$75,000
!
Required information
Problem 10-45 (LO 10-1) (Algo)
[The following information applies to the questions displayed below.]
Wanting to finalize a sale before year-end, on December 29, WR Outfitters sold to Bob a warehouse and the land for
$200,000.
Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.
Problem 10-45 Part c (Algo)
c. Which of the following appraisals would Bob likely prefer?
1. The appraised value of the warehouse was $77,250, and of the land was $175,000.
2. The appraised value of the warehouse was $52,250 and of the land was $200,000.
Bob's Preference
Chapter 11 Solutions
Intermediate Accounting
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