Question

In: Accounting

9- Suppose that a company has 2 buildings, one for investment (A) and one for administrative...

9- Suppose that a company has 2 buildings, one for investment (A) and one for administrative (B) purposes. Both properties have an initial cost of 1.000.000 TL. The company does not use the cost model and both properties have 10 years of useful lives. A is revalued one year later and the revalued amount is 900.000 TL. B is also revalued one year later and the revalued amount is 1.200.000 TL. After the revaluation the company immediately sells A at 950.000 TL and sells B at 800.000 TL. What is the profit/loss amount in the income statement for all of the transactions above?

50.000 loss

250.000 loss

100.000 profit

150.000 profit

8- A PPE is acquired for 10.000 TL at the beginning of 2016. It had a useful life of 5 years. On January 1, 2018 the asset was revalued to 12.000 TL. What would be the comprehensive income in year 2018?

6.000

4.000

2.000

3.000

4- A company sells a plant asset which originally cost 120.000 TL for 40.000 TL on December 31, 2019. The accumulated depreciation account had a balance of 48.000 TL after the current year's depreciation of 12.000 TL had been recorded. The company should recognize a(n)...

80.000 TL loss on disposal

35.000 TL gain on disposal

32.000 TL loss on disposal

20.000 TL loss on disposal

Solutions

Expert Solution

Sol - 9 - The answer of the above problem is given below

Profit on revaluation of building A = Revalued amount - Current book value of building

= $900,000 - $900,000

= $0

Profit on Building A on its sale = Sales amount - The revalued amount of the building

= $950,000 -$900,000

= $50,000

Revaluation amount of Building B = Revalued amount - Current value

= $12,00,000 - $9,00,000

= $3,00,000

Loss on Building B on its sale is = Revalued amount - Consideration -surplus - sales

= $12,00,000 -$8,00,000 - $3,00,000

= $1,00,000

Total profit = Profit of Building A + Profit of building B

=$50,000 + $1,00,000 = $1,50,000

Therefore, the answer to this question is $150,000 profit that is option (D)

Sol - 8 - The calculation of this is given as follows

The current value of PPE =$10,000 - Depreciation for 1 year

= $10,000 - ( $10,000 / 5 year )

= $8,000

Comprehensive income of 2018 = Revalued amount - Current value

= $12,000 - $8,000

= $4,000

Therefore the answer to this question is $4,000 that is option (b)

I have attempted the first 2 questions as there is nothing mentioned how many I have to attempt in case multiple questions are given on the same page so I have attempted the 2 questions out of 3 .

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Suppose that the government makes a one-time investment in new public school buildings, which results in...

Suppose that the government makes a one-time investment in new public school buildings, which results in a one-time reduction in current consumption. The new public school buildings increase the efficiency with which human capital is accumulated. Use the endogenous growth model we discussed in class to determine the effects of this change on the paths of aggregate consumption over time. Explain the trade off between current consumption and future consumption.

Question 2 Mark Limited is an investment company that purchases buildings and holds them for a,...

Question 2 Mark Limited is an investment company that purchases buildings and holds them for a, number of purposes, such as resale, leasing and its own use. On 1 January 2019, Mark Limited purchased an old building, Mark Towers, for N$300 000. Conveyancer’s fees amounted to N$20 000 • This building is situated in an isolated part of Durban (South Africa) and there is no development anywhere nearby. At the time of purchase, there had been no property transactions in...

Question 5 In one of the buildings that your company has installed a network, some of...

Question 5 In one of the buildings that your company has installed a network, some of the devices have stopped working completely. The devices do not even turn on. Your manager has requested that you investigate the possible causes of the damaged devices. Advise on what can be installed so that other devices can be protected. Explain two ways to achieve this.

9) Suppose that t years from now, one investment will be generating profit at the rate...

9) Suppose that t years from now, one investment will be generating profit at the rate of P 1 ′ = 40 + t 2 hundred dollars per year, while a second investment will be generating profit at the rate of P 2 ′ ( t ) = 100 + 4 t hundred dollars per year. For how many years does the rate of profitability of the second investment exceed that of the first? Compute the total net excess profit...

Classic Pen Company is a producer of ballpoint pens. The company has an administrative office that...

Classic Pen Company is a producer of ballpoint pens. The company has an administrative office that is comprised of the executive staff, accounting, purchasing, and the information technology staff. The President leads the executive staff. Accounting consists of a Controller and several accounting clerks, two of whom serve as order processors. Orders are processed by the clerks and sent to manufacturing for scheduling and production. Order processors (2 of them) make $8 per hour and generally work a 40 hour...

Exercise 9-12 Kirkland Company combines its operating expenses for budget purposes in a selling and administrative...

Exercise 9-12 Kirkland Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first 6 months of 2020, the following data are available. 1. Sales: 20,800 units quarter 1; 22,100 units quarter 2. 2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%. 3. Fixed costs per quarter: sales salaries $10,900, office salaries $6,160, depreciation $4,490, insurance $2,080, utilities $880, and repairs expense $670. 4. Unit selling...

Exercise 11-9 Preference Ranking of Investment Projects [LO11-3] Oxford Company has limited funds available for investment...

Exercise 11-9 Preference Ranking of Investment Projects [LO11-3] Oxford Company has limited funds available for investment and must ration the funds among four competing projects. Selected information on the four projects follows: Project Investment Required Net Present Value Life of the Project (years) Internal Rate of Return (percent) A $900,000 $319,400 6 21% B $770,000 $464,050 11 22% C $750,000 $338,750 6 24% D $950,000 $207,050...

The City of Albany is considering three proposals to renovate one of its buildings. Company A...

The City of Albany is considering three proposals to renovate one of its buildings. Company A charges $30,000 upfront payment now and requires three annual payments of $5,000 in the next three years (annual payment coming at the end of each year). Company B offers to get the project done with a total cost of $40,000, which is due now at the beginning of the project. Company C will not bill the city until the project is done in three...

Brief Exercise 9-7 Elbert Company classifies its selling and administrative expense budget into variable and fixed...

Brief Exercise 9-7 Elbert Company classifies its selling and administrative expense budget into variable and fixed components. Variable expenses are expected to be $26,770 in the first quarter, and $5,240 increments are expected in the remaining quarters of 2020. Fixed expenses are expected to be $41,680 in each quarter. Prepare the selling and administrative expense budget by quarters and in total for 2020. ELBERT COMPANY Selling and Administrative Expense Budget Quarter 1 2 3 4 Year $ $ $ $...

Continent Construction Company is a building contractor specializing in small commercial buildings. The company has the...

Continent Construction Company is a building contractor specializing in small commercial buildings. The company has the opportunity to accept one of two jobs; it cannot accept both because they must be performed at the same time and Continent does not have the necessary labor force for both jobs. Indeed, it will be necessary to hire a new supervisor if either job is accepted. Furthermore, additional insurance will be required if either job is accepted. The revenue and costs associated with...

Subjects