On January 1, 2020, Sage Company has the following defined
benefit pension plan balances.
Projected benefit obligation$4,571,000
Fair value of plan assets4,210,000
The interest (settlement) rate applicable to the plan is 10%. On
January 1, 2021, the company amends its pension agreement so that
prior service costs of $492,000 are created. Other data related to
the pension plan are as follows.
2020
2021
Service cost
$152,000 $179,000
Prior service cost amortization
0 89,000
Contributions (funding) to the plan
236,000 285,000
Benefits paid
198,000 275,000
Actual return on plan assets
252,600 261,000
Expected rate of return on assets
6% 8%
Q. Prepare a pension worksheet for the pension plan for 2020 and 2021
Q. For 2021, prepare the journal entry to record pension-related amounts.
In: Accounting
On 1 July, 2018 Bundoora Ltd acquires 25 per cent of the issued capital of Preston Ltd for a cash consideration of $150,000.
At the date of acquisition, the share capital and retained earnings of Preston Ltd are as follows: Share capital $120,000 and Retained earnings $480,000 (Total Shareholders’ equity $600,000).
Additional information:
Required:
In: Accounting
Spear Ltd reported the following information in its statement of financial position at 30 June 2020:
Plant $325 000
Accumulated depreciation – plant (75 000)
Intangible assets 150 000
Accumulated amortisation (50 000)
Land 150 000
Total non-current assets 500 000
Cash 25 000
Inventory 90000
Total current assets 115 000
Total assets $615 000
Liabilities 75 000
Net assets $540 000
At 30 June 2020, Spear Ltd analysed the internal and external sources of information that would indicate deterioration in the worth of its assets. It determined that there were indications of impairment.
Spear Ltd calculated the recoverable amount of the assets to be $490 000.
Required
Provide the journal entry for any impairment loss at 30 June 2020
In: Accounting
EXERCISE 5-4
Allocation of Cost and Workpaper Entries at Date of Acquisition LO 2
On January 1, 2020, Porter Company purchased an 80% interest in Salem Company for $260,000. On this date, Salem Company had common stock of $207,000 and retained earnings of $130,500.
An examination of Salem Company’s balance sheet revealed the following comparisons between book and fair values:
| Book Value | Fair Value | |
| Inventory | $ 30,000 | $ 35,000 |
| Other current assets | 50,000 | 55,000 |
| Equipment | 300,000 | 350,000 |
| Land | 200,000 | 200,000 |
Required:
In: Accounting
Problem 8-48 (c) (LO. 2, 4)
On May 31, 2019, Arnold purchased and placed in service a new $25,000 car. The car was used 90% for business, 5% for production of income, and 5% for personal use in 2019. In 2020, the usage changed to 30% for business, 30% for production of income, and 40% for personal use. Arnold did not elect immediate expensing under § 179. He elects not to take additional first-year depreciation. If required, round your intermediate computations and final answers to the nearest dollar.
Click here to access the cost recovery tables of the textbook. Assume the following luxury automobile limitations: year 1: $10,000; year 2: $16,000.
a. The cost recovery deduction taken in 2019 was $.
b. The cost recovery deduction for 2020 is $.
c. The cost recovery recapture, if any, in 2020 is $.
In: Accounting
Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option
granted would allow an executive to purchase one share of Carmichael’s $10 par value
common stock for $40 per share.
On January 1, 2020, Carmichael granted the executives 60,000 options. The options were non-transferable and the executive had to remain an employee of the company to exercise the options. The options were exercisable within a 2-year period beginning on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $1,200,000.
On July 1, 2022, 45,000 options were exercised.
Required: Based on the information above, prepare the entries required from January 1, 2020, through July 1, 2022.
In: Accounting
| Blackwell Company's income statement for 2020 consisted of: | ||||||||
| Revenues | 1,220,000 | |||||||
| Cost of goods sold | 627,000 | |||||||
| Operating expenses | 295,000 | |||||||
| Depreciation expense | 60,000 | |||||||
| Interest expense | 26,000 | |||||||
| Gain on the sale of machinery | (12,000) | |||||||
| Loss on the sale of investments | 8,000 | 1,004,000 | ||||||
| Income before income tax | 216,000 | |||||||
| Income tax expense | 40,000 | |||||||
| Net income | 176,000 | |||||||
| Blackwell's comparative balance sheet information for 2020 included: | ||||||||
| 12/31/20 | 12/31/19 | |||||||
| Accounts receivable | 268,000 | 257,000 | ||||||
| Accounts payable | 47,000 | 42,000 | ||||||
| Income taxes payable | 17,000 | 13,500 | ||||||
| Interest payable | 9,000 | 7,500 | ||||||
| Bonds payable | 500,000 | 500,000 | ||||||
| Discount on bonds payable | 26,000 | 28,000 | ||||||
| Prepare the Cash flows from operating activities section of Blackwell's 2020 Statement of Cash Flows using the indirect method | ||||||||
| and the required disclosures for interest and income tax expense. | ||||||||
In: Accounting
On January 2, 1990, Hank Brady establishes the Judge Hank Brady Irrevocable Dynasty Trust with Tenleytown Trust Company as trustee. On January 10, 1990, Hank transfers 100 shares of Brady, Inc. stock to the trust worth $1 million. Hank Brady does not allocate any GST exemption to the trust either during the transfer or at any point after, and, therefore, the trust has an inclusion ratio of 1. The trustee has the discretion to distribute principal to the grantor's son, Mike, and Mike's sons, Greg, Peter and Bobby to provide for their welfare. Upon Mike's death, the remainder is distributed in equal shares to Mike's sons. On January 10, 2020, Mike dies. On January 10, 2020, the fair market value of the trust is $10 million. How much GST tax does the trust or its beneficiaries owe in 2020 and why? Who is responsible for paying the tax?
In: Accounting
On June 30, 2020, Crane Company issued $5,640,000 face value of 14%, 20-year bonds at $6,488,600, a yield of 12%. Crane uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. (a) Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(1) The issuance of the bonds on June 30, 2020.
(2) The payment of interest and the amortization of the premium on December 31, 2020.
(3) The payment of interest and the amortization of the premium on June 30, 2021.
(4) The payment of interest and the amortization of the premium on December 31, 2021.
In: Accounting
Carmichael Co. adopted a stock option plan for its top executives. Under the plan, each option
granted would allow an executive to purchase one share of Carmichael’s $10 par value
common stock for $40 per share.
On January 1, 2020, Carmichael granted the executives 60,000 options. The options were non-transferable and the executive had to remain an employee of the company to exercise the options. The options were exercisable within a 2-year period beginning on January 1, 2022. It is assumed that the options were for services performed equally in 2020 and 2021. The Black-Scholes option pricing model determines total compensation expense to be $1,200,000.
On July 1, 2022, 45,000 options were exercised.
Required: Based on the information above, prepare the entries required from January 1, 2020, through July 1, 2022.
In: Accounting