Carla Vista Corp. agreed to lease property from Sunland Corp. effective January 1, 2020, for an annual payment of $25,592, beginning January 1, 2020. The property is made up of land with a fair value of $104,000 and a two-storey office building with a fair value of $170,000 and a useful life of 25 years with no residual value. The implicit interest rate is 9%, the lease term is 25 years, and title to the property is transferred to Carla Vista at the end of the lease term. Prepare the required entries made by Carla Vista Corp. on January 1, 2020, and at its year end of December 31, 2020. Both Carla Vista and Sunland use ASPE.

(Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Lieb Ltd. is public company that trades on the TSX. On 3 March 2020, the company purchased 5,000 common shares of RO Inc. for total proceeds of $140,000, representing 30% of the total outstanding shares of RO Inc. Lieb Ltd. It was determined that at the time of purchase, it was able to exercise significant influence over RO Inc. On 30 September 2020, Lieb Ltd. received a dividend of $1.20 per share from RO Inc. On 31 December 2018, the market value of the RO Inc. investment had dropped to $18 per share. RO Inc.’s net income for the year ended 31 December 2020 was $63,000.

Required:

a)     Prepare all the required 2020 journal entries for transactions above.

b)    If Lieb Ltd. were not able to exercise significant influence over its investment in RO Inc. what other accounting choice(s) does it have to report the investment?

The cost of equipment purchased by Bramble, Inc., on June 1, 2020, is $92,400. It is estimated that the machine will have a $8,400 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 42,000, and its total production is estimated at 600,000 units. During 2020, the machine was operated 6,900 hours and produced 63,200 units. During 2021, the machine was operated 6,320 hours and produced 55,200 units.

Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.)

On January 1, 2020, Patriot Inc. acquires 100% of SoreLoser Corp.'s outstanding common stock by exchanging 80,000 shares of Patriot's $10 par value common voting stock. On January 1, 2020, Patriot's voting common stock had a market value of $60.00 per share. SoreLoser's balances on the acquisition date, just prior to acquisition are listed below. SORELOSER IS BEING DISSOLVED.

                                                                            BOOK             FAIR MARKET

                                                                            VALUE                  VALUE

CASH $ 125,000                 $ 125,000

ACCOUNTS RECEIVABLE 275,000                    275,000

INVENTORY 330,000                    360,000

LAND 400,000                    460,000

BUILDING (NET) 1,250,000                1,500,000  

EQUIPMENT (NET) 1,620,000                1,475,000

ACCOUNTS PAYABLE (250,000)                (250,000)

COMMON STOCK, $1 PAR (1,000,000)             

ADDITIONAL PAID IN CAPITAL(1,500,000)

RETAINED EARNINGS, 1/1/2020(1,250,000)                 

Required:
Compute the value of the Goodwill account on the date of acquisition, 1/1/2020.

RECORD THE JOURNAL ENTRY FOR THE ACQUISITION OF INVESTMENT ON PATRIOT'S BOOKS

On December 31, 2019, Sarasota Inc. borrowed $3,960,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this building: March 1, $475,200; June 1, $792,000; July 1, $1,980,000; December 1, $1,980,000. The building was completed in February 2021. Additional information is provided as follows.

(a)

New attempt is in progress. Some of the new entries may impact the last attempt grading.Your answer is incorrect.

Determine the amount of interest to be capitalized in 2020 in relation to the construction of the building.

The cost of equipment purchased by Blossom, Inc., on June 1, 2020, is $105,000. It is estimated that the machine will have a $4,200 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 50,400, and its total production is estimated at 504,000 units. During 2020, the machine was operated 7,440 hours and produced 68,200 units. During 2021, the machine was operated 6,820 hours and produced 59,520 units.

Compute depreciation expense on the machine for the year ending December 31, 2020, and the year ending December 31, 2021, using the following methods. (Round depreciation per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g. 45,892.)

2020
2021
(a)       Straight-line      
$
$
(b)       Units-of-output      
$
$
(c)       Working hours      
$
$
(d)       Sum-of-the-years'-digits      
$
$
(e)       Double-declining-balance (twice the straight-line rate)      
$
$

Two accountants for the firm of Elwes and Wright are arguing about the merits of presenting an income statement in a multiple-step versus a single-step format. The discussion involves the following 2020 information related to P. Bride Company ($000 omitted). Administrative expense Officers' salaries $4,900 Depreciation of office furniture and equipment 3,960 Cost of goods sold 60,570 Rent revenue 17,230 Selling expense Delivery expense 2,690 Sales commissions 7,980 Depreciation of sales equipment 6,480 Sales revenue 96,500 Income tax 9,070 Interest expense 1,860 Common shares outstanding for 2020 total 40,550 (000 omitted). Prepare an income statement for the year 2020 using the multiple-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.) Prepare an income statement for the year 2020 using the single-step form. (Round earnings per share to 2 decimal places, e.g. 1.48.)

Clemson Company had the following stockholders’ equity as of January 1, 2020.

During 2020, the following transactions occurred.

Prepare the stockholders’ equity section as of April 30, 2020. Net income for the first 4 months of 2020 was $130,000. (Enter account name only and do not provide descriptive information.)

1. Consider the purchase of a new farm truck (automobile). The specific information is:

Total Purchase cost = $150,000.00              Purchase date = Jan 1, 2020

Useful life = 6 years                                      Salvage value = $50,000.00

Note: each highlighted box is worth 1 point

Complete each depreciation table.

ECONOMIC DEPRECIATION:

1. Fill in the table using the straight-line depreciation method for economic depreciation. (5 points)

1. Fill in the table using the straight-line method for economic depreciation as if the purchase date was October 1, 2020 (partial year method) (7 points)