Balance sheet and income statement of preceding information

Assignment Help Financial Accounting

Reference no: EM131203396

Assume Walmart acquires a tract of land on January 1, 2009 for $100,000 cash.On December 31, 2009, the current market value of land is $150,000. On December 31, the current market value of land is $120,000. The firm sells the land on December 31, 2011 for $180,000 cash. Ignore income tax. Indicate the effects on the balance sheet and income statement of the preceding information for 2009, 2010, and 2011 under each of the following valuation methods (Part A-C). A. Valuation of the land at acquisition cost until sale of the land(Approach 1). B. Valuation of the land at current market value but including unrealized gains and losses in accumulated other comprehensive income until sale of land (Approach 2). C. Valuation of the land at current market value and including market value changes each year in net income (Approach 3). D. Why is retained earnings on December 31, 2011, equal to $80,000 in all three cases despite the reporting of different amount of net income each year?

Reference no: EM131203396

Questions Cloud

What is optimal level of capital for firm-corporate tax rate : A corporation produces output with a market price of $200 per unit. The marginal product of capital is 1/(2K), where K is units of capital, with each unit assumed to cost $1. what is the effective corporate tax rate? what is the optimal level of capi..

Calculate value of trade receivables under existing scheme : BLC Ltd. has revenue of £500 million and sells all of its goods on credit to a variety of different wholesale customers. At the moment the company offers a standard credit period of 30 days. Calculate the approximate equivalent annual percentage cost..

Prepare the stockholders equity section : Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders’ equity accounts of Morrow Enterprises Inc., with balances on January 1, 2016, are as follows: Prepare the Stockholders’ Equity section of the December 31, 2016, balance sheet. ..

Additional geological tests of the property : Donahue Oil Company has an account titled Oil and Gas Properties. Donahue paid $6,500,000 for oil reserves holding an estimated 200,000 barrels of oil. Assume the company paid $510,000 for additional geological tests of the property and $480,000 to p..

Balance sheet and income statement of preceding information : Assume Walmart acquires a tract of land on January 1, 2009 for $100,000 cash.On December 31, 2009, the current market value of land is $150,000. On December 31, the current market value of land is $120,000. Indicate the effects on the balance sheet ..

Using the new residual value : Wholesale Hardware Consultants purchased a building for 620,000 and depreciated it on a? straight-line basis over a 25?-year period. The estimated residual value is $120,000. Starting with the 16th? year, Wholesale began depreciating the building ove..

Under the double-declining balance method : A machine is purchased on January 1, 2016, for $100,000. It is expected to have a useful life of ten years and a residual value of $10,000. The company closes its books on December 31. Under the double-declining balance method, what is the total amou..

Respect to the formation and operation of the partnership : Bob and Kate form the BK Partnership, a general partnership, as equal partners. Bob contributes an office building with a $130,000 FMV and a $95,000 adjusted basis to the partnership along with a $60,000 mortgage, which the partnership assumes. What ..

Determine the unit cost for each job using direct labor hour : XYZ Company has identified the following overhead activities, costs, and activity drivers for the coming year: Determine the unit cost for each job using direct labor hours to apply overhead (tradisional method). Determine the unit cost for each job..

User Account

All Pages