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HOW MUCH IS THE NET INCOME IN 2020?
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- 3. On May 10, 2019, GUAVA Company received a grant of ₱8,000,000 from the British Government for the construction of a laboratory and research facility with an estimated cost of ₱10,000,000 and a useful life of 5 years. The facility was completed in early 2020. How much should GUAVA Company include in its 2020 income statement as income from the government?On January 1, 2019, Munich Co. received a grant of P10,000,000 from the government of USA for the construction of a building that will be used as a laboratory and research facility with an estimated cost of P15,000,000 and useful life of 10 years. The facility was completed on January 1, 2020. How much is the balance of deferred income from government grant on December 31, 2020 under the gross method (deferred income approach)?On January 1, 2022, Annibelle Company received a grant of P9,000,000 from the foreign government in order to defray safety and environmental costs within the area where the entity is located. The safety and environmental costs are expected to be incurred over three years, respectively, P1,000,000, P2,000,000 and P3,000,000. What income from the government grant should be recognized in 2022? A. 9,000,000 В. 1,500,000 С. 3,000,000 D. 4,500,000
- ZEN Ltd signs a contract on 30 June 2019, agreeing to build a bridge for XYN at a contract price of $20 million. XYN will be in control of the asset throughout the construction process. ZEN estimates that construction costs will be as follows: Year Ending 30th June 2020 Cost $ 5,000,000 $ 8,000,000 $ 3,000,000 $16,000,000 30th June 2021 30th June 2022 Total The contract provides that XYN will make payments on 30 June of each year as follows: $ 4,000,000 $ 10,000,000 $ 6,000,000 $20,000,000 2020 2021 2022 Total The contract is completed as expected on 30 June 2022. Assume that actual costs and cash collections with expectations and that cost (an input measure) is used as the basis for assessing progress on the car contract. Required: (a) Calculate the income and gross profit recognised each year 2020, 2021, 2022. (b) Prepare the journal entries for the year ended 30th June 2020.On 1 January 2020, Entity A contracted with Entity B to construct a residential building for $20,000,000 on a piece of land that Entity A had already purchased years earlier. The construction was started on 1 January 2020.Entity A was to make five payments in 2020, with the last payment scheduled for the date of completion.The building was completed on 31 December 2020.Entity A made the following payments during 2020: 1 January 2020 $2,000,000 1 April 2020 $4,000,000 30 June 2020 $6,100,000 30 September 2020 $4,400,000 1 December 2020 $3,500,000 Entity A had the following debt outstanding on 31 December 2020: 12%, 2-year long-term debt of $7,500,000 which was borrowed on 1 July 2019. It is specifically related to the residential building project on 1 January 2020. The fund is re-invested and earns interest at a rate of 6.00% per annum. 8%, 10-year long-term debt of $6,000,000 which was borrowed on 31 March 2016. 10%, 5-year long-term…On January 1, 2021, Annibelle Company received a grant of P9,000,000 from the foreign government in order to defray safety and environmental costs within the area where the entity is located. The safety and environmental costs are expected to be incurred over three years, respectively, P1,000,000, P2,000,000 and P3,000,000. What income from the government grant should be recognized in 2021?
- Industrial Development Corporation (IDC) granted Naseer Pty(Ltd) R20 000 on 01 January 2021 to assist in thepurchase of a manufacturing plant.The grant was conditional upon Naseer Pty(Ltd) purchasing the plant and manufacturing for a period of atleast two unbroken years. If the conditions of the grant were not met, the terms of the grant required that thegrant be repaid in full, immediately.The plant was purchased on 3rd January 2021 for R200 000 and was depreciated on the straight-line basisover its useful life of 4 years to a nil residual value.Other information:- Naseer ceased manufacturing on 31 March 2022 due to unforeseen circumstances.- The asset was not considered to be impaired and Naseer intended to resume manufacturing on thenext year. - Ignore the effect of tax and VAT.- Assume that Naseer Pty(Ltd) recognises grants as grant income.- The year end is 31 December Required:a) Show the journal entries relating to the grant for the year ended 31 December 2021 and up until…ZEN Ltd signs a contract on 30 June 2019, agreeing to build a bridge for XYN at a contract price of $20 million. XYN will be in control of the asset throughout the construction process. ZEN estimates that construction costs will be as follows:Year Ending Cost30th June 2020 $ 5,000,00030th June 2021 $ 8,000,00030th June 2022 $ 3,000,000Total $16,000,000The contract provides that XYN will make payments on 30 June of each year as follows:2020 $ 4,000,0002021 $ 10,000,0002022 $ 6,000,000Total $20,000,000The contract is completed as expected on 30 June 2022. Assume that actual costs and cash collections with expectations and that cost (an input measure) is used as the basis for assessing progress on the car contract.Required:(a) Calculate the income and gross profit recognised each year 2020, 2021, 2022.(b) Prepare the journal entries for the year ended 30th June 2020Sandhill Construction, which follows ASPE entered into a contract to construct a bridge for a contract price of $2.8 million. Construction began in 2022 and was completed in 2024. Below are the details of the transactions related to the contract: Costs incurred during the year Estimated costs to complete Revenue Expenses $ Gross Profit $ 2022 2022 $637,000 1,489,000 $844,000 Calculate the gross profit to be recognized each year using the completed-contract method. 2023 $ $ 713,000 2024 $715,900 2023 0 $ $ 2024 SUPPORT
- On January 1, 2021, Super Balut Co. establishes a branch for an initial cash investment of P10,000,000. The subsequent transactions are as follows: a. On January 3, 2021, the home office acquires land and building to be used by the branch for a total cost of P30,000,000. The branch records the assets in its books. The fair value of the land is P11,000,000, while the fair value of the building is P22,000,000. The building has an estimated useful life of 20 years and no residual value. The company uses the straight-line method of depreciation. b. On February 14, 2021, the home office transfers inventory worth P20,000,000 to the branch. The home office pays freight of P500,000. c. On March 1, 2021, the home office transfers additional inventory worth P5,000,000 to the branch. This time the branch pays the freight of P100,000. d. On March 31, 2021, the branch acquires equipment for P900,000 cash. The equipment will be carried in the home office’s books. The equipment has a useful life of…Pharoah Construction entered into a contract to construct a bridge for a contract price of $2.95 million. Construction began in 2019 and was completed in 2021. Below are the details of the transactions related to the contract: 2019 2020 2021 Costs incurred during the year $649,000 $836,000 $693,900 Estimated costs to complete 1,427,800 515,000 0 Calculate the revenue, expenses and gross profit to be recognized each year using the percentage-of-completion method. (Round the percentage completion to 2 decimal places, e.g. 52.75% and other answers to 0 decimal places, e.g. 1,525.) 2019 2020 2021 Revenue $ $ $ Expenses Gross Profit $ $ $18. On January 1, 2020 Ebasan Company took out a 12% P10,000,000 loan to finance the construction of a building. The key dates are as follows: Jan 1: Loan Interest relating to the project starts to be incurred Feb 1: Technical site planning commences Mar 1: Expenditures on the project start to be incurred Apr 1: Construction work commences Nov 1: Substantially all of the activities necessary to prepare the asset for its intended use are complete Dec 1: Building brought into use What amount of interest should Ebasan capitalize for the current year? A. 1,200,000 B. 1,000,000 C. 900,000 D. 800,000
