Reference no: EM132864257
Questions -
Q1) Tunisia Inc. owns assets to which it applies the revaluation model (asset-adjustment method). The following additional information is available:
Accumulated Depreciation at December 31, 2019 (prior to any fair value adjustments) was $12,000.
Between December 31, 2018, and December 31, 2019, the property's fair value had increased by $30,000.
The December 31, 2019 balance in the revaluation surplus account (prior to any fair value adjustments) was $2,000.
Required -
a) What would be the adjusted December 31, 2019 balance in the related contra asset account?
b) What would be the adjusted December 31, 2019 balance in the revaluation surplus account?
c) Assume the same facts as indicated above, except that, between December 31, 2018 and December 31, 2019, the property's fair value had decreased by $10,000. Would this result in a gain or a loss included in Tunisia's 2019 income statement? Include the amount of the gain or loss in your response.
Q2) Morocco Corp. purchased land as a factory site for $250,000. They paid $10,000 to tear down two buildings on the land, and the salvage from these old buildings was sold for $1,350. Legal fees of $870 were paid for the title investigation and making the purchase. Architect's fees were $10,300. Title insurance cost $600, and liability insurance during construction cost $650. Excavation costs were $2,610. A contractor was paid $600,000 to construct the new building. An assessment made by the city for pavement was $1,600. Interest costs during construction were $42,500.
Required -
a) What cost should the land be recorded at?
b) What cost should the building record at?
Q3) Manitoba Ltd. purchased a tract of land for $765,000, which included a warehouse and office building. The following data were collected concerning the property:
Current Assessed Valuation Vendor's Original Cost Land $300,000 $250,000 Warehouse 200,000 150,000 Office building 400,000 300,000 $900,000 $700,000
What are the appropriate amounts that Manitoba Ltd. should record for the land, warehouse, and office building, respectively?
Q4) MMP Inc. exchanged 500 common shares of Penguins Inc., which MMP Inc. was holding as an investment, for new equipment from Easter Sales. The Penguins Inc. common shares, which had been purchased by MMP Inc. for $100 per share, had a quoted market value of $116 per share at the date of exchange. The equipment had a recorded amount on Easter's books of $55,000, but the fair value was not available.
Required - Provide the journal entry that MMP Inc. should make to record this exchange.
Q5) On January 2, 2018, DCL Delivery Company traded in an old delivery truck for a newer model. Data relative to the old and new trucks follow: Old Truck
Original cost $18,000
Accumulated Depreciation at January 2, 2018 12,000
Fair value 6,000
New Truck
List price $30,000
Cash price without trade-in 27,000
Cash paid with trade-in 22,000
What is the cost of the new truck? Please include a brief explanation of this cost, and how you determined it.