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In the company’s interim income statement for the six months ended June 30, 2020, what total amount of expense relating to these items should be reported?
Round UP your FINAL answers up to two decimal places.
![Maya-Maya Company had the following transactions during 2020:
a. On January 1, Vilma company recorded a loss resulting from a change in inventory
valuation method of P80,000.
b. The company had estimated that total depreciation expense for the year ended
December 31, 2020 will amount to P400,000. As of the beginning of the year, the
company had fixed assets amounting to P1,000,000 and acquired additional fixed
assets of P2,000,000 on June 30, 2020. The estimated useful life is for 5 years.
c. The 2020 year-end bonuses to employees will total P600,000.
d. The company had also a 180-day note receivable dated February 28, 2020,
amounting to P3,000,000 and carries a 12% interest rate. It was discounted without
recourse on the same day for a net proceed of P2,985,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F897cb48c-0087-45aa-952b-7af7d4f7170e%2Ff4279bdd-95b2-4943-adb4-5bce4e817e2b%2Fhamrv4s_processed.png&w=3840&q=75)
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- On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received $12,000,000 in net assets. In 2016, the market value of the goodwill obtained from Branta Corp. was valued at $4,000,000, but in 2017 it dropped to $2,000,000. Prepare the journal entry for the creation of goodwill and the entry to record any impairments to it in subsequent years.Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.Maya-Maya Company had the following transactions during 2020: a. On January 1, Vilma company recorded a loss resulting from a change in inventory valuation method of P80,000. b. The company had estimated that total depreciation expense for the year ended December 31, 2020 will amount to P400,000. As of the beginning of the year, the company had fixed assets amounting to P1,000,000 and acquired additional fixed assets of P2,000,000 on June 30, 2020. The estimated useful life is for 5 years. c. The 2020 year-end bonuses to employees will total P600,000. d. The company had also a 180-day note receivable dated February 28, 2020, amounting to P3,000,000 and carries a 12% interest rate. It was discounted without recourse on the same day for a net proceed of P2,985,000. In the company’s interim income statement for the six months ended June 30, 2020, what total amount of expense relating to these items should be reported?
- The T-accounts for Equipment and the related Accumulated Depreciation—Equipment for Luo Company at the end of 2020 are shown here. Equipment Beg. bal. 80,600 Disposals 23,800 Acquisitions 40,000 End. bal. 96,800 Accumulated Depreciation—Equipment Disposals 8,700 Beg. bal. 47,800 Depr. exp. 13,300 End. bal. 52,400 In addition, Luo’s income statement reported a loss on the disposal of plant assets of $6,100. What amount was reported on the statement of cash flows as “cash flow from sale of equipment”? (Show amount that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Cash flow from sale of equipment $Blupa Ltd acquired a 25% interest in Trinity Ltd for $145,000 on 1 July 2020. At that date, shareholders' equity of Trinity Ltd consisted of: Share Capital 280,000 Retained Earnings 86,000 All identifiable assets and liabilities of Trinity Ltd were recorded at fair value except for the machinery which was recorded at $25 000 below its fair value on 1 July 2020. Machinery is depreciated at 25% straight line. Information about income and changes in equity for Trinity Ltd for the year ended 30 June 2021 is as follows: Trinity Ltd Revenue 260,000 Expenses 120,000 Profit before income tax 140,000 Income tax expense 28,000 Profit for the period 112,000 Retained earnings (1/7/20) 86,000 198,000 Dividend paid 12,000 Dividend declared 35,000 47,000 Retained earnings (30/6/21) 151,000At December 31, 2020, the following existed on the records of Chogiwa Co.: Fixed Assets: $860,000 Accumulated Depreciation: $397,000 During the year ended September 30,2021, fixed assets with a written down value of $37,000 was sold for $49,000. The pant had originally cost $80,000. Fixed assets purchased during the year cost $180,000. It is the company's policy to charge a full year's depreciation in the year of acquisition of an asset and none in the year of sale. Chogiwa uses 10% rate on a straight-line basis. What net amount (book value) should appear in the statement of financial position as of September 30, 2021 for fixed assets?
- Day SA acquired the following assets in January 2017. Equipment, estimated service life, 5 years; residual value, P15,000 P465,000Building, estimated service life, 30 years; no residual value P780,000 The equipment has been depreciated using the sum-of-the-years'-digits method for the first 3 years for financial reporting purposes. In 2020, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or residual value. It was also decided to change thetotal estimated service life of the building from 30 years to 40 years, with no change in the estimated residual value. The building is depreciated on the straight-line method. Requireda. Prepare the journal entry to record depreciation expense for the equipment in 2020.b. Prepare the journal entry to record depreciation expense for the building in 2020. (Round to nearest peso.)Shannon Company began operations on January 1, 2020. The financial statement contained the following errors: YEAR 2020- Ending inventory 160,000 understated; Depreciation expense 60,000 understated; Insurance expense 100,000 overstated; Prepaid insurance 100,000 understated; YEAR 2021 - Ending inventory 150,000 overstated; Insurance expense 100,000 understated. On December 31, 2021, fully depreciation machinery was sold for P110,000 cash but the sale was not reported until 2022. No corrections have been made for any of the errors. Ignoring income tax, what amount should be reported as net effect of the errors on Net Income for 2020? a. 200,000 over b. 200,000 under c. 260,000 under d. 0Shannon Company began operations on January 1, 2020. The financial statement contained the following errors: YEAR 2020- Ending inventory 160,000 understated; Depreciation expense 60,000 understated; Insurance expense 100,000 overstated; Prepaid insurance 100,000 understated; YEAR 2021 - Ending inventory 150,000 overstated; Insurance expense 100,000 understated. On December 31, 2021, fully depreciation machinery was sold for P110,000 cash but the sale was not reported until 2022. No corrections have been made for any of the errors. Ignoring income tax, what amount should be reported as net effect of the errors on Working Capital on December 31, 2021?
- Shannon Company began operations on January 1, 2020. The financial statement contained the following errors: YEAR 2020- Ending inventory 160,000 understated; Depreciation expense 60,000 understated; Insurance expense 100,000 overstated; Prepaid insurance 100,000 understated; YEAR 2021 - Ending inventory 150,000 overstated; Insurance expense 100,000 understated. On December 31, 2021, fully depreciation machinery was sold for P110,000 cash but the sale was not reported until 2022. No corrections have been made for any of the errors. Ignoring income tax, what amount should be reported as net effect of the errors on Retained Earnings on December 31, 2021? a. 100,000 over b. 100,000 under c. 200,000 over d. 200,000 underDay SA acquired the following assets in January 2017. Equipment, estimated service life, 5 years; residual value, P15,000 P465,000 Building, estimated service life, 30 years; no residual value P780,000 The equipment has been depreciated using the sum-of-the-years'-digits method for the first 3 years for financial reporting purposes. In 2020, the company decided to change the method of computing depreciation to the straight-line method for the equipment, but no change was made in the estimated service life or residual value. It was also decided to change the total estimated service life of the building from 30 years to 40 years, with no change in the estimated residual value. The building is depreciated on the straight-line method. Required Prepare the journal entry to record depreciation expense for the equipment in 2020. Prepare the journal entry to record depreciation expense for the building in 2020. (Round to nearest peso.)At December 31, 2020, the following existed on the records of BULGOGI Co.: Fixed Assets: $86,000 Accumulated Depreciation: $39,700 Fixed assets purchased during the year cost $180,000. During the year ended September 30,2021, fixed assets with a written down value of $37,000 was sold for $49,000. The plant had original cost of $80,000. It is the company's policy to charge a full year's depreciation in the year of acquisition of an asset and none in the year of sale. DRA uses 10% rate on a straight-line basis. What net amount (book value) should appear in the statement of financial position as of September 30, 2021 for fixed assets?
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