A company buys an oil rig for P1,000,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is P200,000 (present value at 10% is P77,110). 10% is an appropriate interest rate for this company. What is the amount of liability should be presented under the 2020 balance sheet as a result of these events?
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A company buys an oil rig for P1,000,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is P200,000 (present value at 10% is P77,110). 10% is an appropriate interest rate for this company. What is the amount of liability should be presented under the 2020 balance sheet as a result of these events?
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- On January 1, 2020, ABC Company sold a piece of land for P10,000,000.The company received a 10%, P10,000,000 note payable on December31, 2029. The interest is payable every December 31. The land waspurchased for P1,750,000. The prevailing market interest rate for similarnotes is 12%.How much is the carrying value as of December 31, 2027?A company buys an oil rig for $2,700,000 on January 1, 2020. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $575,000 (present value discounted at 10% (fair rate for this company) is $221,687). What is the total amount of expense that shoOuld be recorded in the financial statements for 2020 as a result of these events (hint: consider both depreciation of the oil rig and any interest on the asset retirement obligation). There is no estimated salvage value for the oil rig and the company uses straight-line depreciation. Round all intermediate calculations to whole dollars. O $346,266 O $314,338 O $292.169 O $22,169 O $327,500Johnstone Company is facing several decisions regarding investing and financing activities. Address each decision independently.1. On June 30, 2021, the Johnstone Company purchased equipment from Genovese Corp. Johnstone agreed to pay Genovese $10,000 on the purchase date and the balance in five annual installments of $8,000 on each June 30 beginning June 30, 2022. Assuming that an interest rate of 10% properly reflects the time value of money in this situation, at what amount should Johnstone value the equipment?2. Johnstone needs to accumulate sufficient funds to pay a $400,000 debt that comes due on December 31, 2026. The company will accumulate the funds by making five equal annual deposits to an account paying 6% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2021.3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $120,000 beginning on…
- On December 31, 2020, Pearl Limited acquired a machine from Pronghorn Corporation by issuing a $520,000, non–interest-bearing note that is payable in full on December 31, 2024. The company’s credit rating permits it to borrow funds from its several lines of credit at 10%. The machine is expected to have a five-year life and a $80,000 residual value.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the note and prepare the journal entry for the purchase on December 31, 2020. (Hint: Refer to Chapter 3 for tips on calculating and use the amount arrived at by using the time value of money tables for the journal entry.) Please help with the solution in excelA company expects to retire an existing machine at the end of 2024 and will replace it with a new machine for the same task at an estimated cost of P60,000. The old machine is expected to be sold for P5,000 when it is replaced. To provide for the replacement, the company intends to deposit the following amounts in an account earning interest at 8% compounded quarterly: P20,000 at the end of 2021 P15,000 at the end of 2022 P10,000 at the end of 2023 What additional amount is needed at the end of 2024 to purchase the new machine? Draw the CFD.1. On June 30, 2021, the Johnstone Company purchased equipment from Genovese Corp. Johnstone agreed to pay Genovese $27,000 on the purchase date and the balance in eight annual installments of $4,000 on each June 30 beginning June 30, 2022. Assuming that an interest rate of 10% properly reflects the time value of money in this situation, at what amount should Johnstone value the equipment?2. Johnstone needs to accumulate sufficient funds to pay a $570,000 debt that comes due on December 31, 2026. The company will accumulate the funds by making five equal annual deposits to an account paying 7% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2021.3. On January 1, 2021, Johnstone leased an office building. Terms of the lease require Johnstone to make 20 annual lease payments of $137,000 beginning on January 1, 2021. A 10% interest rate is implicit in the lease agreement. At what amount should Johnstone record the lease…
- Hips Company purchased an asset with a list price of P130,000 to be delivered on July 1, 2021 with the following payment terms: A deposit of P26,000 is due on June 1, 2021 and cash on delivery of P26,000 is due on July 1, 2021. Three annual payments of P26,000 starting July 1, 2022 and thereafter. The seller waived its normal interest charge of 6% per year. The equipment is expected to last 5 years, with a residual value of P26,000. Hips has a December 31 yearend. What should be the depreciation expense for the year ended December 31, 2021On June 30, 2024, the Stone Company purchased equipment from Paper Corporation. Stone agreed to pay $14,000 on the purchase date and the balance in five annual installments of $6,000 on each June 30 beginning June 30, 2025. Assuming that an interest rate of 11% properly reflects the time value of money in this situation, at what amount should Stone value the equipment? Stone needs to accumulate sufficient funds to pay a $440, 000 debt that comes due on December 31, 2029. The company will accumulate the funds by making five equal annual deposits to an account paying 6% interest compounded annually. Determine the required annual deposit if the first deposit is made on December 31, 2024. On January 1, 2024, Stone leased an office building. Terms of the lease require Stone to make 20 annual lease payments of $124,000 beginning on January 1, 2024. An 11% interest rate is implicit in the lease agreement. At what amount should Stone record the lease liability on January 1, 2024, before any…Manatee Corporation purchased a special conveyor system on December 31, 2025. The purchase agreement stipulated that Manatee should pay $50,000 at the time of purchase and $15,000 at the end of each of the next 5 years. The conveyor system should be recorded on December 31, 2025, at what amount, assuming an appropriate interest rate of 8%?
- A company recorded $10m of development costs as at 31 December 2018. The company expects the net profit of this newly developed product to be $15m over four years. 30% of this profit is expected to be earned in 2019, 30% in 2020, 20% in 2021 and balance in 2022. The amortisation amount for 2019 and 2020 is: Question 7 options: 1) $2.5m for both years 2) $3.0m for both years 3) $4.0m for both years 4) $4.0m and 5.0m respectivelyBenson Limited is constructing a Power Plant which was completed on 31st December 2019. The company obtained a bank loan of R1,000,000 at a rate of 15% per annum to construct the Power Plant on 1st January 2019. As of 31st December 2019, Benson Limited also had the following loans outstanding: 18% 5-year loan Note of R1,500,000 14% Debentures of R1,000,000 Expenditures on the project were made as follows: On the 31st March 2019, R600,000 was incurred; R800,000 was incurred on 30th June 2019; The final expenditure incurred was R300,000 on 31st December 2019. During the year Benson Limited invested R400,000 of the bank loan for 2 months at an interest of 9% per annum. Required: Determine the amount of borrowing costs to be capitalized and expensed. I. II. I. II. III.On January 1, 2021, Dreamlover Corporation purchased equipment from Daydream Company for P3,600,000. Term of payments includes issuing a 5-year noninterest-bearing note payable equally every end of the year. The effective interest rate is 15%. The entity used 2 decimal places for the PVF. Requirements: How much is the initial cost of the equipment?
