Matthew Company issues 4,000 ordinary shares to its external lawyers for services related to the successful completion of a lawsuit that Matthew Company is currently defending. The lawyers spent 250 hours working on the case. On the basis of recent invoices from the lawyers, Matthew Company determines the fair value of the services received to be P1,400 per hour. The quoted price of the shares was P58. The amount to be reported as expense in relation to legal services received is.

Matthew Company issues 4,000 ordinary shares to its external lawyers for services related to the successful completion of a lawsuit that Matthew Company is currently defending. The lawyers spent 250 hours working on the case. On the basis of recent invoices from the lawyers, Matthew Company determines the fair value of the services received to be P1,400 per hour. The quoted price of the shares was P58. The amount to be reported as expense in relation to legal services received is.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 17E

See similar textbooks

Similar questions

a. Matthew Company issues 4,000 ordinary shares to its external lawyers for services related to the successful completion of a lawsuit that Matthew Company is currently defending. The lawyers spent 250 hours working on the case. On the basis of recent invoices from the lawyers, Matthew Company determines the fair value of the services received to be P1,400 per hour. The quoted price of the shares was P58. The amount to be reported as expense in relation to legal services received is. b. Mark Company hired Luke, an external consultant, to assess its oil reserves. The service was provided over a five-month period and will be settled by Mark Company issuing 100 of its shares to Luke to the value of P40,000 at issuance. Mark Company estimated the cash fair value of the service at 38,000, based on bids from other consultants. Luke, the consultant was considered an employee for tax purposes. The amount reported as expense in relation to the consultancy service is
ABC was formed by an investor who exchanged 1,000,000 for 100,000 shares of stock on August 1. ABC prepaid 18 months of rent by paying $96,000. ABC hired 3 employees and agreed to pay each $100,000/year. ABC agreed to pay at the end of each month; after the services are performed. ABC withholds 20% for federal tax; 5% for state tax; and 7.65% for FICA. ABC sold services over the year for $1,200,000 on account. They warranty their work for 1 year. ABC estimated 1% for bad debts using the percent of sales method. ABC estimated $100,000 in warranty work, but only paid out $20,000 (as cash back) in warranties through the end of the year. ABC received $400,000 in cash against the receivable by year-end. On 8/15 ABC purchased equipment signing a note for $400,000. ABC depreciated the equipment by $60,000 for book purposes and $50,000 for tax purposes. ABC accrued $6,000 in interest expense. On 8/1 ABC invested $200,000 into muni-bonds. The bonds paid $9,000 in interest. ABC driver got a…
A lawsuit has been filed against North Shore Company. As year-end, the company’s attorney believes that there is an 60% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $150,000 and $300,000 and that all amounts within the range are equally likely. Unrelated to this lawsuit, the company has settled an insurance claim before year-end in the amount of $72000. The company will receive the money subsequent to year-end. What would be the amount, if any, that North Shore would record on the balance sheet related to the lawsuit under IFRS and US GAAP? What amount, if any, would North Shore record related to the insurance settlement under IFRS and US GAAP?
First Link Services granted 6 million of its $1 par common shares to executives, subject to forfeiture if employment is terminated within three years. The common shares have a market price of $24 per share on the grant date of the restricted stock award. 1. Ignoring taxes, what is the total compensation cost pertaining to the restricted shares?2. Ignoring taxes, what is the effect on earnings in the year after the shares are granted to executives?
The controller for Bramble Corporation has reached an agreement with Sheffield Financing Ltd. to sell a large portion of Bramble's past-due accounts receivable. Bramble agrees to sell $1,820,000 of accounts receivable to Sheffield with recourse. Bramble's controller estimates that the fair value of Bramble's liability to pay Sheffield for uncollectible accounts is $163.000. Sheffield will charge Bramble 9% of the total receivables balance as a financing fee, and will withhold an initial amount of 10% (a) Calculate the net proceeds and the gain or loss on the disposal of receivables to Sheffield Financing Ltd. Net proceeds ✓on disposal of receivables S $
Furman Corporation entered into an assignment agreement with a finance company whereby Furman would be advanced 80% of all accounts assigned, minus a $2,000 service charge. The assignment does not meet the conditions for a sale and should be accounted for as a secured borrowing. During the year, $300,000 of accounts receivable were assigned, $220,000 collections were made on outstanding assigned accounts, and $210,000 was remitted to the finance company. This remittance included interest charges of $2,100. Sales returns and allowances on assigned accounts amounted to $5,000. Required: 1. Prepare the journal entries necessary to record the preceding information. 2. Show how the preceding information would be reported on Furman’s year-end balance sheet (assume the note payable is short-term).
The Resty Company issued 200,000 new P1 ordinary shares at a fair value of P1.80each. Resty identified the following costs in relation to the share issue: Professional fees of P40,000. Internal management time in managing the process of P30,000.These costs are deductible in arriving at the entity’s income tax liability. Thecurrent rate of tax is 30%.In accordance with PAS32 Financial instruments: presentation, the increase inequity in the statement of financial position of Resty as a result of the transactionwill bea. P360,000b. P332,000c. P320,000d. P311,000
As of December 31 of the current year, Petersen Corporation has prepared the following information regarding its liabilities and other obligations. Notes payable, of which $12,000 will be repaid within the next 12 months $80,000 Interest expense that will result from existing liabilities over the next 12 months 125,000 Lawsuit pending against Petersen, in which $600,000 is claimed in damages. Legal counsel can make no reasonable estimate of the company’s ultimate liability at this time 600,000 20-year bond issue that matures in two years. The entire amount will be repaid from a bond sinking fund 900,000 Accrued interest on the 20-year bond issue as of the balance sheet date 36,000 Three-year commitment to John Hoskins as chief financial officer at a salary of $275,000 per year 825,000 Note payable due within 90 days (but that is approved to be extended for an additional 18 months) 75,000 Cash deposits from customers for goods and services to be delivered over the next nine months…
Kwan Shalley Sdn Bhd (KWSB) is a contracting company that provides estate maintenance services. It had a total of 12 such contracts. One of its contracts, which accounted for around 65 percent of its total yearly fees, was prematurely terminated during the year ending December 31, 2017. KWSB received RM450,000 in compensation, which is equal to two years' worth of fees under the contract.REQUIRED:Explain whether the compensation received by KWSB is taxable under Income Tax Act 1967.
Pandom LLC has a yearly turnover of OMR 2000 million. Which of the following information is material to the users of its financial statements? I. Pandom LLC has been sued by Aspring LLC for OMR 200 million as damages for breach of contract. The decision of the Court is still pending. II Pandom LLC does not disclose details of its operating lease in respect of an office space rented at OMR 10,000 per annum. II. Pandom LLC sold goods worth OMR 20 million to its subsidiary Delta LLC I, II and III only I and III only II and III only I only
Following are preacquisition financial balances for Padre Company and Sol Company as of December 31. Also included are fair values for Sol Company accounts.On December 31, Padre acquires Sol’s outstanding stock by paying $360,000 in cash and issuing 10,000 shares of its own common stock with a fair value of $40 per share. Padre paid legal and accounting fees of $20,000 as well as $5,000 in stock issuance costs.Determine the value that would be shown in Padre’s consolidated financial statements for each of the accounts listed.
On January 1, 20x8, Jolybee Corporation sold a franchise to Mr. AMG for P10,000,000 for the right to operate as a franchisee of Jolybee Corporation. Terms of the franchise contract were: 1. The initial franchise fee of P1,000,000 is payable in cash, when the contract is signed and the balance in five equal instalment every december 31, evidenced by a 12% promissory note. 2. The franchisor will assist in locating the site, supervise construction activity and training of management and employees. On December 31, 20x8 direct cost of services rendered to the franchisee amounted to P2,000,000. Assuming that there is substantial performance of services required in the contract and the collectability of the note receivable is not reasonably assured, using the instalment method how much net income is to be recognized by Jolybee on December 31, 20x8?