Vanessa raised a $15 000 000 loan to fund the exploration that led to the discovery of the deposit of silver. Discuss whether the loan meets the definition and recognition criteria of a liability to Vanessa during the term of the loan, according to provisions of the IASB Conceptual; Framework.
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Vanessa raised a $15 000 000 loan to fund the exploration that led to the discovery of the deposit of silver. Discuss whether the loan meets the definition and recognition criteria of a liability to Vanessa during the term of the loan, according to provisions of the IASB Conceptual; Framework.
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- On January 1, 2021 Simon Co. purchased an item of equipment for P600,000, including P50,000 refundable purchase taxes. The purchase price was funded by raising a loan of P605,000. In addition, the entity has to pay P5,000 in loan raising fees to the Bank. The loan is secured against the equipment. In January 2021 the entity incurred costs of P20,000 in transporting the equipment to the entity’s site and P100,000 in installing the equipment at the site. At the end of the equipment’s 10-year useful life the entity is required to dismantle the equipment and restore the building housing the equipment. The present value of the cost of dismantling the equipment and restoring the building is estimated to be P100,000. In January 2021 the entity’s engineer incurred the following costs in modifying the equipment so that it can produce the products manufactured by the entity: • Materials – P55,000 • Labour – P65,000 • Depreciation of plant and equipment used to perform the modifications –…Which of the following transactions or events is treated as a Sec. 1231 gain or loss? All assets are held for more than one year. (Complete all input fields. If the transaction or event is not a Sec. 1231 gain/loss, select "Not applicable".) Transactions or events Sec. 1231 a. Theft of uninsured diamond ring, with an $800 basis and a $1,000 FMV. Not applicable b. Gain due to condemnation of land used in business. Sec. 1231 gain c. Loss on the sale of a warehouse. Sec. 1231 loss d. Gain of $4,000 on the sale of equipment. Depreciation deductions allowed amount to $10,000. Sec. 1231 gainOn January 01, 2021 Commission on Audit purchased an item of equipment for P550,000. The purchase price was funded by raising a loan of P 605,000 (including 5,000 loan raising fees). The loan is secured against the equipment. In January 2021, COA incurred costs of P 20,000 in transporting the equipment to the entity’s site and P 100,000 in installing the equipment at the site. At the end of the equipment’s 5-year useful life the entity is required to dismantle the equipment and restore the land upon which the factory is built. The present value of the cost of dismantling the equipment and restoring the environment is estimated to be P100,000. COA’s engineer incurred material cost, P55,000 and labor cost, P65,000 in modifying the equipment so that it can produce the government forms needed by Management. The equipment was ready for use on March 01, 2021. However, because of low initial production levels the entity incurred a loss of P23,000 on operating the equipment during March.…
- Assume REH AG, a hypothetical company, incurs expenditures of AC1,000 per month during the fiscal year ended December 31, 2019 to develop software for internal use. Under IFRS, the company must treat the expenditures as an expense until the software meets the criteria for recognition as an intangible asset, after which time the expenditures can be capitalized as an intangible asset. 1 What is the accounting impact of the company being able to demonstrate that the software met the criteria for recognition as an intangible asset on February 1 versus December 1? 2 How would the treatment of expenditures differ if the company reported under US GAAP and it had established in 2018 that the project was likely to be completed and the software used to perform the function intended?On January 1, 2021, Raquel Company purchased a machine for 3,000,000. The entity received a government grant of 500,000 in respect of this asset. The policy is to depreciate the asset over 5 years on a straight line basis and to treat the grant as deferred income. On January 1, 2023, the grant became fully repayable because of non compliance with conditions. Required: Prepare journal entries for 2021, 2022 and 2023.Burger Company constructed its own building which qualifies for interest capitalization. Burger incurred the following cost and had the following outstanding borrowings while the building is under construction. January 1, 2022 P3,000,000 March 31, 2022 2,500,000 June 30, 2022 2,100,000 November 1, 2022 1,275,000 September 1, 2023 5,575,200 Outstanding borrowings: Dated January 1, 2022 - 3,000,000; 7% (specific) Dated January 1, 2022 - 2,000,000; 10% (general) Dated January 1, 2023 - 4,000,000; 8% (general) The construction was completed on December 31, 2023 and ready for its intended use. How much is the initial cost of the building when completed on December 31, 2023 in Burger financial position?
- Which of the following companies has a disclosure for which FASB ASC 450 applies, but FASB ASC 275 does not? O Comfort House has a loss contingency at the financial statement date, and it is remotely A. possible that the estimate for this contingency will change by a material amount within the next year. B. The Garden Foundation has an asset on which the depreciation will be recalculated due to the life of the assets being extended. C. The Summer Group has equipment that will be written down. D. The Winter Group has an intangible asset that needs to be written down.Excavator Ltd had two areas of interest, Site A and Site B. The following costs were incurred to each area of interest during year 2019: Year Site A Site B ($ million) ($ million) 2019 Cash paid to acquire seismic study from government before the exploration Labour.costs of engineers to analyse the seismic data obtained Cash paid to acquire exploration rights for the area from government Legal costs associated with obtaining the exploration licence Hire of drilling equipment for exploratory drilling Contractors' fees for exploratory drilling 5.5 10 2.5 367 620 3. 2 25 15 12 NOTE: Ignore GST. In relation to the above expenditures that can be classified as exploration and evaluation costs, 70 per cent relates to intangible assets and the balance of the expenditure relates to property, plant and equipment. In 2020, oil of an economically recoverable nature is discovered at Site A, but Site B is abandoned. Production begins in 2021. Site A is estimated to have 2,000 barrels. The current…I need help on how to calculate this problem step by step, please. Information concerning Sure Corporation's intangible assets is as follows: On January 1, 2019, Sure signed an agreement to operate as a franchisee of Rapid Copy Service Inc. for an initial franchise fee of $81,000. Of this amount, $21,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of $15,000 each beginning January 1, 2020. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 2, 2019, of the 4 annual payments discounted at 12% (the implicit rate for a loan of this type) is $45,600. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sure's revenue from the franchise for 2019 was $800,000. Sure estimates the useful life of the franchise to be 5 years. Sure incurred $69,000 of experimental and development costs in its…
- 7. Karen Company purchased a varnishing machine for P3,000,000 on January 1, 2019. The entity received a government grant of P500,000 in respect of this asset. The accounting policy is to depreciate the asset over 4 years on a straight line basis and to treat the grant as deferred income. How much deferred income from the government grant will be presented in the statement of financial position for 2019?The following selected transactions relate to liabilities of Chicago Glass Corporation for 2024. Chicago's fiscal year ends on December 31. On January 15, Chicago received $7,400 from Henry Construction toward the purchase of $70,000 of plate glass to be delivered on February 6. On February 3, Chicago received $7,100 of refundable deposits relating to containers used to transport glass components. On February 6, Chicago delivered the plate glass to Henry Construction and received the balance of the purchase price. First quarter credit sales totaled $740,000. The state sales tax rate is 4% and the local sales tax rate is 2%. Required: Prepare journal entries for the above transactions. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.The Chambers Corporation was formed in early 2017. At the time of formation, Chamber spent the following amounts: accounting fees, $4,000; legal fees, $8,000; stock certificate costs, $3,000; initial franchise fee, $10,000; initial lease payment, $5,000; promotional fees, $3,000. Chamber intends to capitalize and amortize intangibles over the maximum allowable period in accordance with generally accepted accounting principles. Based on this strategy, what is Chambers's expense associated with organization costs in 2017? $33,000 $28,000 $6,000 $18,000