Accounting Answers

On July 1, 2021, Ria Co. purchased a ₱400,000 tract of land that is interested to be the site of a new office complex. Ria incurred additional cost and realized salvage proceeds during 2021 as follows:

Demolition of the existing building on site 75,000

Legal and other fees to close escrow 12,000

Proceeds from sale of demolition scrap 10,000

Based on the above data, answer the following:

1. Assume that the new office building is to be constructed right away, how much is the cost of the land?

2. Assume that the new office building is to be constructed next year, how much is the cost of the land?

On January 1,2021, Mhelson Co. acquired an equipment with a fair value of ₱5,080,000 by assuing 500 bonds. Each bond has a face value of ₱10,000 and fair value of ₱10,200.

Based on the above data, answer the following:

1. How much is the initial cost of the equipment?

2. How much is the gain (or loss) on exchange to be recognized in the profit or loss of Mhelson Co.?

On January 1,2021, Raicel Co. traded an old equipment for a newer model. Data before the trade in are follows:

Old equipment:

Cost ₱350,000

Accumulated depreciation 120,000

Average published retail value 60,000

New equipment:

List price ₱400,000

Cash price without trade in 340,000

Cash price with trade in 270,000

Questions:

Based on the above data, answer the following:

1. How much is the cost of the equipment to be recognized by Raciel Co.?

2. How much is the gain (or loss) on trade in to be recognized by Raciel Co.?

On January 1,2021, Jimar Co. acquired an equipment by issuing two-year, noninterest bearing note amounting to ₱1,000,000. The prevailing interest rate of the note is 12%.

Questions:

1.   Assuming the equipment has cash price equivalent of ₱800,000, how much is the cost of the equivalent?

2.   Assuming the equivalent has no cash price equivalent, how much is the cost of the equivalent?

On January 1,2021, Judycel Co. acquired on equipment for ₱500,000 on account with term of 3/10, n/30. Additional costs incurred are as follows:

Freight and insurance ₱15,000

Cost of testing and trial runs 12,000

Proceeds from selling the samples produced during 

Testing and trial runs 2,000

Training cost of staff who will operate the equipment 13,000

 The account was paid on January 10,2021.

How much is the cost of the equipment?

on January 1,2021 Kalimutan Mo acquired 30% of the ordinary shares that carry voting rights at a general meeting of shareholders of Sige Sige Lang for ₱300,000. Kalimutan Mo has significant influence over Sige Sige Lang. For the year ended December 31,2021 Sige Sige Lang recognized a profit of ₱400,000.

On December 30,2021 Sige Sige Lang declared and paid a dividend of ₱150,000 for the year 2021. At December 31,2021 the fair value of the investment in Sige Sige Lang is ₱425,000.

Case No. 2: Assume there is no published price quotation for Sige Sige Lang and Kalimutan Mo uses the equity method.

1.   What amount should be reported by Kalimutan Mo in its statement of comprehensive income?

2.   How much is the carrying amount of the investment in associate to be reported by Kalimutan Mo in its statement of financial position as of December 31,2021?

on January 1,2021 Kalimutan Mo acquired 30% of the ordinary shares that carry voting rights at a general meeting of shareholders of Sige Sige Lang for ₱300,000. Kalimutan Mo has significant influence over Sige Sige Lang. For the year ended December 31,2021 Sige Sige Lang recognized a profit of ₱400,000.

On December 30,2021 Sige Sige Lang declared and paid a dividend of ₱150,000 for the year 2021. At December 31,2021 the fair value of the investment in Sige Sige Lang is ₱425,000.

Questions:

Case No. 1: Assume there is no published price quotation for Sige Sige Lang and Kalimutan Mo uses the cost model.

1. What amount should be reported by Kalimutan Mo in its statement of comprehensive income?

2. How much is the carrying amount of the investment in associate to be reported by Kalimutan Mo in its statement of financial position as of December 31,2021?

Give examples of transactions that would have the following effects on the items in a firm’s

financial statements:

a. Increase cash; decrease some other asset.

b. Decrease cash; increase some other asset.

c. Increase an asset; increase a liability.

d. Decrease retained earnings; decrease an asset.

e. Increase an asset other than cash; increase retained earnings.

f. Decrease an asset; decrease a liability

Inventory systems is an accounting topic prescribed for grade12 in the CAPS document. Prepare:

a) a class test (consisting of short answer questions) and

b) a memorandum for this class test

(30) marks