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In: Accounting
Lessee Company enters into a 6-year finance lease of non-specialized equipment with Lessor Company on January 1, 2020. Lessee has agreed to pay $44,800 annually beginning immediately on January 1, 2020. The lease includes an option for the lessee to purchase the equipment at $4,800, which is $3,200 below the estimated fair value at lease end. Lessee Company is reasonably certain that it will exercise the purchase option. The economic life of the asset is 7 years. The lessee’s incremental borrowing rate is 7% and the lessor’s implicit rate is not readily determinable by the lessee. Record Lessee Company’s journal entries on (a) January 1, 2020, and (b) December 31, 2020, assuming that the lease is properly classified as a finance lease.
In: Accounting
Blossom Company sells goods that cost $325,000 to Pina Colada Company for $415,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $44,200. The fair value of the goods is $380,800. The goods were delivered on March 1, 2020. Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Pina Colada Company pays Blossom $275,000 upon delivery of the goods and the balance at the completion of the installation.
Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Blossom. Assume IFRS is followed.
Prepare the journal entries for Blossom on January 2, March 1, and June 18, 2020.
In: Accounting
Habiby, Inc., began operations in 2017 and has the following income and expenses for 2017 through 2020.
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Refer to the Corporate Tax Rate Schedule table to answer the following questions.
a. What is the amount of tax that Habiby should pay each year? If an amount is zero, enter "0".
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b. How much would Habiby have paid in tax if the old NOL rules were in place but the corporate tax rate was 21 percent?. If an amount is zero, enter "0".
| 2017 | $ |
| 2018 | $ |
| 2019 | $ |
| 2020 | $ |
In: Accounting
Mary Lou, a cash-basis taxpayer, signs a 12-month lease for $36,000 which starts on May 1, 2020.
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a. Assume that she paid the entire $36,000 on the date she signed the lease as required to obtain this rate. Show the calculation for her 2020 deduction. b. Let's say that prepaying the lease was not required and she paid only the monthly amount the first of each month. Show the calculation of her 2020 deduction. c. Refer back to the original scenario in part a, and $36,000 was required to be paid up front when the lease commences on 5/1/20. But now the lease is for 24 months instead of 12 months. Show the calculation of Mary Lou's 2020 deduction? |
In: Accounting
Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are:
2020 2021
Costs incurred to date...................................................................... $ 540,000 $ 875,000
Estimated costs to complete as of December 31................. 360,000 100,000
Billings to date..................................................................................... 420,000 950,000
Collections to date............................................................................. 300,000 700,000
Classical uses the percentage-of-completion method. Gross profit recognized in 2020 was $210,000 (Revenue $750,000; expense $540,000). The 2020 opening balance on LT Contract Asset/Liab is $330,000 DR.
Required:
(a) Calculate gross profit to be recognized in 2021.
(b) What amounts will be reported on the Statement of Financial Position in 2021?
(c) If the estimated costs to complete were $300,000 at the end of 2021, how would your response to part (a) change?
In: Accounting
Assume that in the first quarter of 2020, real GDP and potential GDP were both $20 trillion and the unemployment rate was 3.5%. Assume that potential GDP is still $20 trillion in the second of 2020 but that actual real GDP is $19 trillion.
a. What is the annualized growth rate of real GDP between the first and second quarters?
b. What is the output gap in the second quarter of 2020?
c. According to Okun’s law, what will be the unemployment rate in the second quarter of 2020?
d. Assume that in the second quarter consumption is equal $13 trillion, net exports are equal to -$0.5 trillion, and government purchases and planned investment are both equal to $3 trillion. What is the amount of inventory investment?
In: Economics
Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are:
2020 2021
Costs incurred to date...................................................................... $ 540,000 $ 875,000
Estimated costs to complete as of December 31................. 360,000 100,000
Billings to date..................................................................................... 420,000 950,000
Collections to date............................................................................. 300,000 700,000
Classical uses the percentage-of-completion method. Gross profit recognized in 2020 was $210,000 (Revenue $750,000; expense $540,000). The 2020 opening balance on LT Contract Asset/Liab is $330,000 DR.
Required:
(a) Calculate gross profit to be recognized in 2021.
(b) What amounts will be reported on the Statement of Financial Position in 2021?
(c) If the estimated costs to complete were $300,000 at the end of 2021, how would your response to part (a) change?
In: Accounting
Exercise 6-17
Siren Company builds custom fishing lures for sporting goods
stores. In its first year of operations, 2020, the company incurred
the following costs.
| Variable Costs per Unit | ||
| Direct materials | $7.80 | |
| Direct labor | $3.59 | |
| Variable manufacturing overhead | $6.03 | |
| Variable selling and administrative expenses | $4.06 | |
| Fixed Costs per Year | ||
| Fixed manufacturing overhead | $244,400 | |
| Fixed selling and administrative expenses | $218,504 |
Siren Company sells the fishing lures for $26.00. During 2020, the
company sold 80,000 lures and produced 94,000 lures.
Prepare a variable costing income statement for 2020.
Prepare an absorption costing income statement for 2020.
In: Accounting
The details of the January 1, 2020 purchase of property, plant
& equipment by Concord Industries is as follows:
| Cost | Residual Value |
Useful Life | Depreciation Method |
|||||
| Machinery | $1,466,000 | $106,000 | 1 million units | Activity Method | ||||
| Building | $647,000 | $77,000 | 30 years | Straight line | ||||
| Computer | $202,500 | $11,000 | 5 years | Double-Declining-Balance |
During 2020 Concord produced 150,000 units using its machinery.
Calculate the 2020 depreciation for each of the property, plant
& equipment items. (Round depreciation per unit to
2 decimal places, e.g. 7.25 and final answers to 0 decimal places,
e.g. 5,125.)
| 2020 Depreciation Expense | ||
| Machinery Equipment | $ | |
| Building | $ | |
| Computer Equipment | $ |
In: Accounting