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intermediate accounting ifrs 4th edition
Intermediate Accounting IFRS 4th Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions
On July 31, 2022, Mexico Company paid $3,000,000 to acquire all of the ordinary shares of Conchita Incorporated, which became a division (cashgenerating unit) of Mexico. Conchita reported the following statement of financial position at the time of the acquisition.It was determined at the date of
On June 30, 2022, your client, Ferry plc, was granted two patents covering plastic cartons that it had been producing and marketing profitably for the past 3 years. One patent covers the manufacturing process, and the other covers the related products.Ferry’s executives tell you that these
Presented below are the components related to an office block that Veenman NV is considering purchasing for €10,000,000.Instructionsa. Compute depreciation expense for 2022, assuming that Veenman uses component depreciation (zero residual value).b. Assume that the building engineering was
Obihiro Group has equipment with an original cost of ¥500,000,000 and related accumulated depreciation of ¥100,000,000 on December 31, 2022. The fair value of the equipment at December 31, 2022, is ¥650,000,000. The equipment has a useful life of 4 years remaining after December 31, 2022, with
At the end of 2022, Sapporo Group tests a machine for impairment. The machine is carried at depreciated historical cost, and its carrying amount is ¥150,000. It has an estimated remaining useful life of 10 years. The machine’s recoverable amount is determined on the basis of a value-in-use
Kohlbeck Corporation, a manufacturer of steel products, began operations on October 1, 2021. The accounting department of Kohlbeck has started the plant asset and depreciation schedule (presented after the following information). You have been asked to assist in completing this schedule. In
Fontenot SA was organized in 2021 and began operations at the beginning of 2022. The company is involved in interior design consulting services. The following costs were incurred in 2022, prior to the start of operations.Attorney’s fees in connection with organization of the company
Devon Harris Company has provided information on intangible assets as follows.A patent was purchased from Bradtke Company for $2,500,000 on January 1, 2021. Harris estimated the remaining useful life of the patent to be 10 years. The patent was carried in Bradtke’s accounting records at a net
McNabb Company spent $190,000 developing a new process prior to achieving economic viability, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented, all in the year 2022. How should these costs be accounted for in 2022?
Ltd. commenced operations in early 2022. The company incurred HK$60,000,000 of costs such as fees to underwriters, legal fees, governmental fees, and promotional expenditures during its formation. Prepare journal entries to record the HK$60,000,000 expenditure and 2022 amortization, if any.
During 2021, Matsumura Ltd. spent ¥170,000 in research costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2021, and had a legal life of 20years and a useful life of 10 years. Legal costs of ¥24,000 related to the patent were incurred as
Treasure Land plc incurred the following costs in 2022.Cost of laboratory research aimed at discovery of newknowledge ................................................................................... £120,000Cost of testing in search for product alternatives .................. 100,000Cost of
Yoon Industries has the following patents on its December 31, 2021, statement of financial position (amounts in thousands).The following events occurred during the year ended December 31, 2022.1. Research and development costs of ₩245,700 were incurred during the year. All of these costs (except
What is goodwill? What is a bargain purchase?
Fred Graf, owner of Graf Interiors, is negotiating for the purchase of Terrell Galleries. The following statement of financial position of Terrell is given in an abbreviated form.Graf and Terrell agree that:1. Land is undervalued by $50,000.2. Equipment is overvalued by $5,000.Terrell agrees to
Nieland Industries had one patent recorded on its books as of January 1, 2022. This patent had a book value of $288,000 and a remaining useful life of 8 years. During 2022, Nieland incurred research costs of $96,000 and brought a patent infringement suit against a competitor. On December 1, 2022,
On July 1, 2022, Brandon SE purchased Mills Company by paying €250,000 cash and issuing a €150,000 note payable. At July 1, 2022, the statement of financial position of Mills Company was as follows.The recorded amounts all approximate current values except for land (fair value of €80,000),
Sinise Industries acquired two copyrights during 2022. One copyright related to a textbook that was developed internally at a cost of €9,900. This textbook is estimated to have a useful life of 3 years from September 1, 2022, the date it was published. The second copyright (a history research
The following information is related to a copyright owned by Botticelli Company at December 31, 2022.Cost ......................................................... $8,600,000Carrying amount ..................................... 4,300,000Recoverable amount ..............................
Braxton Inc. is considering the write-off of a limited-life intangible because of its lack of profitability. Explain to the management of Braxton how to determine whether a write-off is permitted.
The following is net asset information related to the Ting Division of Santana Ltd. Ting Division
Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2021, the company expends €325,000 on a research project, but by the end of 2021 it is impossible to determine whether any benefit will be derived from
Martinez Company incurred the following costs during 2022 in connection with its research and development activities.Cost of equipment acquired that will have alternative uses in future R&D projects over the next 5 years (uses straight-linedepreciation)
In 2021, Jackie Chan Ltd. developed a new product that will be marketed in 2023. In connection with the development of this product, the following costs were incurred in 2022: research and development costs ¥40,000,000, materials and supplies consumed ¥6,000,000, and compensation paid to research
An intangible asset with an estimated useful life of 30 years was acquired on January 1, 2012, for $540,000. On January 1, 2022, a review was made of intangible assets and their expected service lives, and it was determined that this asset had an estimated useful life of 30 more years from the date
In early January 2021, Reymont Corporation applied for a trade name, incurring legal costs of $18,000. In January 2022, Reymont incurred $7,800 of legal fees in a successful defense of its trade name.Instructionsa. Compute 2021 amortization, 12/31/21 book value, 2022 amortization, and 12/31/22 book
Montana Matt’s Golf Ltd. was formed on July 1, 2021, when Matt Magilke purchased the Old Master Golf Company. Old Master provides video golf instruction at kiosks in shopping malls. Magilke plans to integrate the instructional business into his golf equipment and accessory stores. Magilke paid
Powerglide plc, organized in 2021, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2022.InstructionsPrepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for
In 2022, Ghostbusters SA spent €420,000 for “goodwill” visits by sales personnel to key customers. The purpose of these visits was to build a solid, friendly relationship for the future and to gain insight into the problems and needs of the companies served. How should this expenditure be
As the recently appointed auditor for Ng Ltd., you have been asked to examine selected accounts before the 6-month financial statements of June 30, 2022, are prepared. The controller for Ng mentions that only one account is kept for intangible assets.InstructionsPrepare the entry or entries
On September 1, 2022, Winans Ltd. acquired Aumont Enterprises for a cash payment of £700,000. At the time of purchase, Aumont’s statement of financial position showed assets of £620,000, liabilities of £200,000, and equity of £420,000. The fair value of Aumont’s assets is estimated to be
Cuevas Co. is in the process of developing a revolutionary new product. A new division of the company was formed to develop, manufacture, and market this new product. As of year-end (December 31, 2022), the new product has not been manufactured for resale (economic viability has not been
During 2020, Robin Wright Tool Company purchased a building site for its proposed research and development laboratory at a cost of $60,000. Construction of the building was started in 2020. The building was completed on December 31, 2021, at a cost of $320,000 and was placed in service on January
Presented below is selected information for Palmiero Company.1. Palmiero purchased a patent from Vania Co. for $1,500,000 on January 1, 2020. The patent is being amortized over its remaining legal life of 10 years, expiring on January 1, 2030. During 2022, Palmiero determined that the economic
Gershwin plc obtained a franchise from Sonic Hedgehog Inc. for a cash payment of £120,000 on April 1, 2022. The franchise grants Gershwin the right to sell certain products and services for a period of 8 years. Prepare Gershwin’s April 1 journal entry and December 31 adjusting entry.
What are the three main characteristics of intangible assets?
After securing lease commitments from several major stores, Auer Shopping Center, Inc. was organized and built a shopping center in a growing suburb.The shopping center would have opened on schedule on January 1, 2022, if it had not been struck by a severe tornado in December. Instead, it opened
Langrova SpA has the following amounts reported in its general ledger at December 31, 2022.Organization costs ................................................................................. €24,000Trademarks
Choo Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Choo does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns
Use the information provided in BE12.1. Assume that at January 1, 2024, the carrying amount of the patent on Celine Dion’s books is $43,200. In January, Celine Dion spends $24,000 successfully defending a patent suit. Celine Dion still feels the patent will be useful until the end of 2031.
The financial statements of adidas (DEU) and Puma (DEU) are presented in Appendices B and C, respectively. The complete annual reports, including the notes to the financial statements, are available online.InstructionsUse the companies’ financial information to answer the following questions.a.
The financial statements of M&S (GBR) are presented in Appendix A. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a.
Reichenbach Co., organized in 2021, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2021 and 2022.InstructionsPrepare the necessary entries to clear the Intangible Assets account and to set up separate accounts
Celine Dion Corporation purchases a patent from Salmon Company on January 1, 2022, for $54,000. The patent has a remaining legal life of 16 years. Celine Dion feels the patent will be useful for 10 years. Prepare Celine Dion’s journal entries to record the purchase of the patent and 2022
Su Ltd. acquired an excavator on January 1, 2020, for ¥10,000 (all amounts in thousands). This excavator represents the company’s only piece of equipment, and Su chooses revaluation accounting. This excavator is being depreciated on a straight-line basis over its 10-year useful life. There is no
Falcetto Company acquired equipment on January 1, 2021, for €12,000. Falcetto elects to value this class of equipment using revaluation accounting. This equipment is being depreciated on a straight-line basis over its 6-year useful life. There is no residual value at the end of the 6-year period.
Use the information in E11.25.InstructionsPrepare the journal entries to record the revaluation of the land in each year.Data from E11.25Pengo Ltd. owns land that it purchased at a cost of ¥400 million in 2020. The company chooses to use revaluation accounting to account for the land. The land’s
Pengo Ltd. owns land that it purchased at a cost of ¥400 million in 2020. The company chooses to use revaluation accounting to account for the land. The land’s value fluctuates as follows (all amounts in thousands as of December 31): 2020, ¥450,000; 2021, ¥360,000; 2022, ¥385,000; 2023,
Tanaka Ltd. has land that cost ¥15,000,000. Its fair value on December 31, 2022, is ¥20,000,000. Tanaka chooses the revaluation model to report its land. Explain how the land and its related valuation should be reported.
Croatia Company purchased land in 2022 for $300,000. The land’s fair value at the end of 2022 is $320,000; at the end of 2023, $280,000; and at the end of 2024, $305,000.InstructionsPrepare the journal entries to record the land using revaluation accounting for 2022– 2024.
At the beginning of 2022, Callaway Company acquired a mine for $850,000. Of this amount, $100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of the ore appear to be in the
Henrik Mining purchased land on February 1, 2022, at a cost of €1,250,000. It estimated that a total of 60,000 tons of mineral was available for mining. After it has removed all the mineral resources, the company will be required to restore the property to its previous state because of strict
Federer Drilling has leased property on which oil has been discovered. Wells on this property produced 18,000 barrels of oil during the past year that sold at an average sales price of €65 per barrel. Total oil resources of this property are estimated to be 250,000 barrels.The lease provided for
The management of Sprague Inc. was discussing whether certain equipment should be written off as a charge to current operations because of obsolescence. This equipment has a cost of $900,000 with depreciation to date of $400,000 as of December 31, 2022. On December 31, 2022, management projected
Assume the same information as E11.18, except that Pujols intends to dispose of the equipment in the coming year. Instructionsa. Prepare the journal entry (if any) to record the impairment of the asset at December 31, 2022.b. Prepare the journal entry (if any) to record depreciation expense
Presented below is information related to equipment owned by Pujols SpA at December 31, 2022.Cost ......................................................................... €9,000,000Accumulated depreciation to date ...................... 1,000,000Value-in-use
Brazil Group purchases a tractor at a cost of €50,000 on January 2, 2022. Individual components of the tractor and useful lives areas follows (zero residual value).Instructionsa. Compute depreciation expense for 2022, assuming Brazil Group depreciates the tractor as a single unit.b. Compute
On March 10, 2024, No Doubt Company sells equipment that it purchased for $240,000 on August 20, 2017. It was originally estimated that the equipment would have a life of 12 years and a residual value of $21,000 at the end of that time, and depreciation has been computed on that basis. The company
Parnevik Group uses revaluation accounting for a class of equipment it uses in its golf club refurbishing business. The equipment was purchased on January 2, 2022, for €500,000; it has a 10-year useful life with no residual value. Parnevik has the following information related to the equipment.
Kawasaki Ltd. shows the following entries in its Equipment account for 2023. All amounts (in yen, in thousands) are based on historical cost.Instructionsa. Prepare any correcting entries necessary.b. Assuming that depreciation is to be charged for a full year on the ending balance in the asset
Andrea Shen purchased a computer for €8,000 on July 1, 2022. She intends to depreciate it over 4 years using the double-declining-balance method. Residual value is €1,000. Compute depreciation for 2023.
Peloton Company constructed a building at a cost of $2,400,000 and occupied it beginning in January 2003. It was estimated at that time that its life would be 40 years, with no residual value.In January 2023, a new roof was installed at a cost of $300,000, and it was estimated then that the
In 1995, Abraham AS completed the construction of a building at a cost of €1,900,000 and first occupied it in January 1996. It was estimated that the building would have a useful life of 40 years and a residual value of €60,000 at the end of that time.Early in 2006, an addition to the building
A building that was purchased December 31, 1998, for £2,500,000 was originally estimated to have a life of 50 years with no residual value at the end of that time. Depreciation has been recorded through 2022. During 2023, an examination of the building by an engineering firm discloses that its
Phelps Oil Wildcatters plc has leased property on which oil has been discovered. Wells on this property produced 36,000 barrels of oil during the past year, which sold at an average sales price of £65 per barrel. Total oil resources of this property are estimated to be 500,000 barrels. The lease
Machinery purchased for $52,000 by Carver Co. in 2018 was originally estimated to have a life of 8 years with a residual value of $4,000 at the end of that time. Depreciation has been entered for 5 years on this basis. In 2023, it is determined that the total estimated life should be 10 years with
What is component depreciation?
Roland SE uses special strapping equipment in its packaging business. The equipment was purchased in January 2021 for €10,000,000 and had an estimated useful life of 8 years with no residual value. At December 31, 2022, new technology was introduced that would accelerate the obsolescence of
Silverman Company purchased machinery for $162,000 on January 1, 2022. It is estimated that the machinery will have a useful life of 20 years, residual value of $15,000, production of 84,000 units, and working hours of 42,000. During 2022, the company uses the machinery for 14,300 hours, and the
On January 1, 2021, Luis SA, a small machine-tool manufacturer, acquired for R$1,260,000 a piece of new industrial equipment. The new equipment had a useful life of 5 years, and the residual value was estimated to be R$60,000. Luis estimates that the new equipment can produce 12,000 machine tools
Goldman SA bought a machine on June 1, 2020, for €31,800, f.o.b. the place of manufacture. Freight to the point where it was set up was €200, and €500 was expended to install it. The machine’s useful life was estimated at 10 years, with a residual value of €2,500. On June 1, 2021, an
Workman Group purchased a machine on January 2, 2022, for €800,000. The machine has an estimated useful life of 5 years and a residual value of €100,000. Depreciation was computed by the 150% declining-balance method. What is the amount of accumulated depreciation at December 31, 2023?
Tan Chin Ltd. purchases a building for HK$11,300,000 on January 2, 2022. An engineer’s report shows that of the total purchase price, HK$11,000,000 should be allocated to the building (with a 40-year life, no residual value), HK$150,000 to 15- year property, and HK$150,000 to 5-year property.
January 1, 2020, a machine was purchased for $90,000. The machine has an estimated residual value of $6,000 and an estimated useful life of 5 years. The machine can operate for 100,000 hours before it needs to be replaced. The company closed its books on December 31 and operates the machine as
Holt plc purchased a computer for £8,000 on January 1, 2021. Straightline depreciation is used, based on a 5-year life and a £1,000 residual value. In 2023, the estimates are revised. Holt now feels the computer will be used until December 31, 2024, when it can be sold for £500. Compute the 2023
Agazzi Company purchased equipment for $304,000 on October 1, 2022. It is estimated that the equipment will have a useful life of 8 years and a residual value of $16,000. Estimated production is 40,000 units, and estimated working hours are 20,000. During 2022, Agazzi uses the equipment for 525
Ortiz SA purchased a piece of equipment that cost R$202,000 on January 1, 2022. The equipment has the following components.Compute the depreciation expense for this equipment at December 31, 2022. Component Cost Residual Value Estimated Useful Life A R$70,000 R$7,000 10 years B 50,000 5,000 5 years
Darby Sporting Goods Plc has seen increased demand for its products over the last several years. The last two Olympic Games greatly increased the popularity of basketball around the world. As a result, a European sports retailing consortium entered into an agreement with Darby’s Roundball
Cominsky Company purchased a machine on July 1, 2023, for $28,000. Cominsky paid $200 in title fees and county property tax of $125 on the machine. In addition, Cominsky paid $500 shipping charges for delivery, and $475 was paid to a local contractor to build and wire a platform for the machine on
Jerry Prior, Beeler AG’s controller, is concerned that net income may be lower this year. He is afraid upper-level management might recommend cost reductions by laying off accounting staff, including him. Prior knows that depreciation is a major expense for Beeler. The company currently uses the
A depreciation schedule for semitrucks owned by Ichiro Manufacturing was requested by your auditor soon after December 31, 2023, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2020 to 2023, inclusive. The following data were
Wenner Furnace Corp. purchased machinery for $279,000 on May 1, 2022. It is estimated that it will have a useful life of 10 years, residual value of $15,000, production of 240,000 units, and working hours of 25,000. During 2023, Wenner Corp. uses the machinery for 2,650 hours, and the machinery
Use the information for Lockard SE given in BE11.2. (a) Compute 2022 depreciation expense using the double-declining-balance method. (b) Compute 2022 depreciation expense using the double-declining-balance method, assuming the machinery was purchased on October 1, 2022.BE11.2.Lockard SE
As a cost accountant for San Francisco Cannery, you have been approached by Phil Perriman, canning room supervisor, about the 2022 costs charged to his department. In particular, he is concerned about the line item “depreciation.” Perriman is very proud of the excellent condition of his canning
Cosby AG purchased a new plant asset on April 1, 2022, at a cost of €774,000. It was estimated to have a service life of 20 years and a residual value of €60,000. Cosby’s accounting period is the calendar year.Instructionsa. Compute the depreciation for this asset for 2022 and 2023 using the
Use the information for Lockard SE given in BE11.2. (a) Compute 2022 depreciation expense using the sum-of-the-years’-digits method. (b) Compute 2022 depreciation expense using the sum-of-the-years’-digits method, assuming the machinery was purchased on April 1,
The cost of equipment purchased by Charleston, SA, on June 1, 2022, is €89,000. It is estimated that the machine will have a €5,000 residual value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 42,000, and its total production
Lockard SE purchased machinery on January 1, 2022, for €80,000. The machinery is estimated to have a residual value of €8,000 after a useful life of 8 years. (a) Compute 2022 depreciation expense using the straight-line method. (b) Compute 2022 depreciation expense using the
The financial statements of M&S (GBR) are presented in Appendix A. The company’s complete annual report, including the notes to the financial statements, is available online.InstructionsRefer to M&S’s financial statements and the accompanying notes to answer the following questions.a.
Hakodat Manufacturing Group was organized January 1, 2022. During 2022, it has used in its reports to management the straight-line method of depreciating its plant assets.On November 8, you are having a conference with Hakodat’s officers to discuss the depreciation method to be used for income
Alladin Company purchased Machine #201 on May 1, 2022. The following information relating to Machine #201 was gathered at the end of May.Price .......................................................................................... $85,000Credit terms
Fernandez Corporation purchased a truck at the beginning of 2022 for $50,000. The truck is estimated to have a residual value of $2,000 and a useful life of 160,000 miles. It was driven 23,000 miles in 2022 and 31,000 miles in 2023. Compute depreciation expense for 2022 and 2023.
On January 1, 2022, Pavlova Company received a notice from the government that a new highway was being built and that land and a building owned by the company were going to be claimed in the process.The company employed an appraiser and estimated that the land had a fair value of $114,000 and the
On December 31, 2022, Mitsui Ltd. has a machine with a book value of ¥940,000. The original cost and related accumulated depreciation at this date are as follows all amounts in thousands.Machine .................................................. ¥1,300,000Less: Accumulated depreciation
The following transactions occurred during 2023. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated residual value. Depreciation is charged for a full year on all fixed assets acquired during the year, and
Yilmaz SA is provided a grant by the local government to purchase land for a building site. The grant is a zero-interestbearing note for 5 years. The note is issued on January 2, 2022, for €5 million payable on January 2, 2027. Yilmaz’s incremental borrowing rate is 6%. The land is not
Rialto Group received a £100,000 grant from the government to acquire £500,000 of delivery equipment on January 2, 2022. The delivery equipment has a useful life of 5 years. Rialto uses the straightline method of depreciation. The delivery equipment has a zero residual value.Instructionsa. If
Yintang Group has negotiated the purchase of a new piece of automatic equipment at a price of HK$7,000 plus tradein, f.o.b. factory. Yintang paid HK$7,000 cash and traded in used equipment. The used equipment had originally cost HK$62,000; it had a book value of HK$42,000 and a secondhand fair
Montgomery Ltd. purchased an electric wax melter on April 30, 2023, by trading in its old gas model and paying the balance in cash. The following data relate to the purchase.List price of new melter ........................................................... £15,800Cash paid
Logan Industries purchased the following assets and constructed a building as well. All this was done during the current year.Assets 1 and 2: These assets were purchased at a lump sum for €104,000 cash. The following information was gathered.Asset 3: This machine was acquired by making a
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