Question 12
Pearl Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $459,900. The estimated fair values of the assets are land $87,600, building $321,200, and equipment $116,800. At what amounts should each of the three assets be recorded?
Question 16
Concord Company owns equipment that cost $1,125,000 and has accumulated depreciation of $475,000. The expected future net cash flows from the use of the asset are expected to be $625,000. The fair value of the equipment is $500,000.
Prepare the journal entry, if any, to record the impairment loss.
Account Titles and Explanation Debit Credit
Question 17
Pina Corporation purchases a patent from Blossom Company on January 1, 2017, for $59,000. The patent has a remaining legal life of 16 years. Pina feels the patent will be useful for 10 years. Assume that at January 1, 2019, the carrying amount of the patent on Pina's books is $47,200. In January, Pina spends $24,000 successfully defending a patent suit. Pina still feels the patent will be useful until the end of 2026.
Prepare the journal entries to record the $24,000 expenditure and 2019 amortization.
Question 22
Sarasota Inc. is involved in a lawsuit at December 31, 2017.
Prepare the December 31 entry assuming it is probable that Sarasota will be liable for $954,500 as a result of this suit.
Prepare the December 31 entry, if any, assuming it is not probable that Sarasota will be liable for any payment as a result of this suit.
Question 23
Flounder Factory provides a 2-year warranty with one of its products which was first sold in 2017. Flounder sold $1,024,400 of products subject to the warranty. Flounder expects $128,520 of warranty costs over the next 2 years. In that year, Flounder spent $74,030 servicing warranty claims. Prepare Flounder's journal entry to record the sales (ignore cost of goods sold) and the December 31 adjusting entry, assuming the expenditures are inventory costs. (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.)
Question 29
On June 30, 2018, Falk Co. sold equipment to an unaffiliated company for $2,000,000. The equipment had a book value of $1,080,000 and a remaining useful life of 10 years. That same day, Falk leased back the equipment at $12,000 per month for 5 years with no option to renew the lease or repurchase the equipment. Falk's rent expense for this equipment for the year ended December 31, 2018, should be
$288,000.
$120,000.
$72,000.
$96,000.