Reference no: EM132972876
Questions -
Q1. EEE Co. decided to construct a building to expand its operations. The entity decided to obtain a 5-year specific loan from EFF Bank for 10,000,000 at 12% on December 31, 2018, to finance the construction of the building. The construction started on January 2, 2019 and the building was completed on December 31 of the same year. Payments were made as follows: January 2 - 1,500,000; April 1 - 2,000,000; June 1 - 2,100,000; October 1 - 1,700,000; December 1 - 2,200,000. What is the intial cost of the building?
a. 10,080,000
b. 9,500,000
c. 10,700,000
d. 10,640,000
Q2. GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for 1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G's fair value is 680,000. EYCH's machine (Machine H) was purchased on January 1, 2018, for 2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is 2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay 1,500,000. The exchange is considered to be with commercial substance. How much is the gain (loss) from exchange that should be recognized by GEE Company?
a) 1,500,000 - L0SS
b) 80,000 - GAIN
c) 20,000 - LOSS
d) 20,000 - GAIN
Q3. GEE Company and EYCH Inc. decided to exchange machineries on January 1, 2019. The machine of GEE (Machine G) was purchased in January 1, 2016 for 1,000,000. The estimated useful life of the machine is 10 years, with no residual value. On the date of the exchange, Machine G's fair value is 680,000. EYCH's machine (Machine H) was purchased on January 1, 2018, for 2,500,000. The estimated useful life of the machine is 5 years, with no residual value. The fair value of Machine H on the date of exchange is 2,100,000. Because of the difference in the fair values, included in the agreement is a stipulation wherein GEE shall pay 1,500,000. The exchange is considered to be with commercial substance. How much shall EYCH Inc. initially recognize Machine G?
a. 2,000,000
b. 600,000
c. 680,000
d. 2,100,000
Q4. JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current replacement cost is 1,500,000. The machine, which was purchased last January 1, 2017 for 1,000,000, has a carrying value of 400,000. The entity has been consistent in depreciating its machine using the straight-line method. On September 1, 2021, the entity sold the machine for 140,000. How much is the revaluation surplus as of December 31, 2019 after revaluation?
a) 600,000
b) 500,000
c) 1,100,000
d) 200,000
Q5. JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current replacement cost is 1,500,000. The machine, which was purchased last January 1, 2017 for 1,000,000, has a carrying value of 400,000. The entity has been consistent in depreciating its machine using the straight-line method. On September 1, 2021, the entity sold the machine for 140,000. How much is the revaluation surplus as of December 31, 2020?
a. 550,000
b. 100,000
c. 300,000
d. 200,000
Q6. JAY Inc. decided to revalue its machine on December 31, 2019, and determined that the current replacement cost is 1,500,000. The machine, which was purchased last January 1, 2017 for 1,000,000, has a carrying value of 400,000. The entity has been consistent in depreciating its machine using the straight-line method. On September 1, 2021, the entity sold the machine for 140,000. How much is the gain(loss) from disposal?
a) 160,000 - GAIN
b) 40,000 - LOSS
c) 40,000 - GAIN
d) 160,000 - LOSS