Assume that The Cheesecake Factory paid cash for all costs of building and equipping its new restaurant in Pittsburgh. How will Cheesecake Factory's total equity be impacted by this event? (Ignore the impact of depreciation when answering this question.)
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- On June 1, 2020, Bridgeport Company sells $172,000 of shelving units to a local retailer, ShopBarb, which is planning to expand its stores in the area. Under the agreement, ShopBarb asks Bridgeport to retain the shelving units at its factory until the new stores are ready for installation. Title passes to ShopBarb at the time the agreement is signed. The shelving units are delivered to the stores on September 1, 2020, and ShopBarb pays in full. Prepare the journal entries for this bill-and-hold arrangement (assuming that conditions for recognizing the sale as a bill-and-hold sale have been met) for Bridgeport on June 1 and September 1, 2020. The cost of the shelving units to Bridgeport is $88,000.On June 1, 2020, Vaughn Company sells $193,000 of shelving units to a local retailer, ShopBarb, which is planning to expand its stores in the area. Under the agreement, ShopBarb asks Vaughn to retain the shelving units at its factory until the new stores are ready for installation. Title passes to ShopBarb at the time the agreement is signed. The shelving units are delivered to the stores on September 1, 2020, and ShopBarb pays in full. Prepare the journal entriesOn June 1, 2020, Mills Company sells $200,000 of shelving units to a local retailer, ShopBarb, which is planning to expand its stores in the area. Under the agreement, ShopBarb asks Mills to retain the shelving units at its factory until the new stores are ready for installation. Title passes to ShopBarb at the time the agreement is signed. The shelving units are delivered to the stores on September 1, 2020, and ShopBarb pays in full. Prepare the journal entries for this bill-and-hold arrangement (assuming that conditions for recognizing the sale as a bill-and-hold sale have been met) for Mills on June 1 and September 1, 2020. The cost of the shelving units to Mills is $110,000.
- The Auto Clinic is a wholly owned subsidiary of Fast-Check Equipment Company. Fast-Check Equipment sells and leases 4-wheel alignment machines. The usual selling price of each machine is $35,000; it has a cost to Fast- Check Equipment of $25,000. On January 1, 2015, Fast-Check Equipment leased such a machine to Auto Clinic. The lease provided for payments of $9,096 at the start of each year for five years. The payments include $1,000 per year for maintenance to be provided by the seller. There is a bargain purchase price of $2,000 at the end of the fifth year. The implicit interest rate in the lease is 10% per year. The equipment is being depreciated over eight years.The amortization schedule for the lease prepared by Fast-Check Equipment is as attached:Prepare the eliminations and adjustments, in entry form, that would be required on a consolidated worksheet prepared on December 31, 2015.The Cook Company is a national portable building manufacturer. Its Benton plant will become idle on December 31, 2017. Mary Carter, the corporate controller, has been asked to look at three options regarding the plant: ■ Option 1: The plant, which has been fully depreciated for tax purposes, can be sold immediately for $750,000. ■ Option 2: The plant can be leased to the Timber Corporation, one of Cook’s suppliers, for 4 years. Under the lease terms, Timber would pay Cook $175,000 rent per year (payable at year-end) and would grant Cook a $60,000 annual discount from the normal price of lumber purchased by Cook. (Assume that the discount is received at year-end for each of the 4 years.) Timber would bear all of the plant’s ownership costs. Cook expects to sell this plant for $250,000 at the end of the 4-year lease. ■ Option 3: The plant could be used for 4 years to make porch swings as an accessory to be sold with a portable building. Fixed overhead costs (a cash outflow) before any…The Cook Company is a national portable building manufacturer. Its Benton plant will become idle on December 31, 2017. Mary Carter, the corporate controller, has been asked to look at three options regarding the plant: ■ Option 1: The plant, which has been fully depreciated for tax purposes, can be sold immediately for $750,000. ■ Option 2: The plant can be leased to the Timber Corporation, one of Cook’s suppliers, for 4 years. Under the lease terms, Timber would pay Cook $175,000 rent per year (payable at year-end) and would grant Cook a $60,000 annual discount from the normal price of lumber purchased by Cook. (Assume that the discount is received at year-end for each of the 4 years.) Timber would bear all of the plant’s ownership costs. Cook expects to sell this plant for $250,000 at the end of the 4-year lease. ■ Option 3: The plant could be used for 4 years to make porch swings as an accessory to be sold with a portable building. Fixed overhead costs (a cash outflow) before any…
- A company decided to lease a food truck to promote sales across the country. The truck cost $65,000 and the company signed an irrevocable five-year lease. The company is trying to determine how to account for this asset. Which Financial Accounting Standards Board (FASB) guideline should the company use to report the truck? Capitalize the lease only because its non-cancellable. Capitalize the leased asset only if the company also capitalizes installment purchases. Capitalize the lease because it is a fixed asset. Capitalize the lease because it is long-term.Entity A is a listed company that owns and operates a number of Japanese restaurants in Hong Kong. Some of the restaurants are operated under a franchise agreement from another company, Entity B. Several payments were incurred during the year 2020: On 20 May 2020, Entity A purchased a new software system which is mainly for inventory control and management. The cost of the software is $550,000. The payment was settled on 20 June 2020. The software is expected to use for 10 years. On 30 June 2020, Entity A paid a franchise fee of $ 150,000 to Entity B for the use of a trading name for the new restaurant which is located at Hunghom. On 15 October 2020, Entity A paid a training cost of $45,000 for staff at the new Hunghom restaurant. On 21 November 2020, Entity A paid an advertising cost of $165,000 for the opening of the new Hunghom restaurant. On 13 December 2020, Entity A acquired a patent right from Entity C for $350,000 under a 20-year contract. REQUIRED: According to relevant…Pain Limited (“Pain”) manufactures dental chairs for sale and for lease. On October 1, 2019 they enter into a 5 year, non-cancellable agreement to lease 4 chairs to Red Deer Dental. (“RDD”). Pain has a December 31st fiscal year-end and RDD has a September 30th fiscal year-end. Both companies depreciate their equipment on a straight-line basis and the chairs would have a nil (zero) residual value at the end of their economic life. Terms of the lease agreement are as follows: · Pain’s carrying value of the tables (4 * $6,500) $ 26,000 · Annual payments (4 chairs * $1,650 per chair) due each October 1 (commencing 2019) $ 6,600 · Bargain purchase option after 5 years (4 chairs * $250 per chair) $ 1,000 · Economic life of the chairs 6 years · Interest rate implicit in the lease 10% There are no unreimbursable costs likely to be incurred by the lessor and the credit risk associated with the lease is normal. Pain follows IFRS, RDD follows ASPE. a)…
- TBTF Incorporated rents commercial real state to locally based businesses. TBTF purchased a large office complex on January 2, 2022. In exchange for the real estate, TBTF issued a noninterest bearing note to the seller. This note will be paid in equal instalments that include both principal and interest at the end of each calendar year. Other information pertaining to the purchase of the real estate follows: Annual instalment payment amount Market rate of borrowing for TBTF Number of years note will be outstanding Portion of the purchase price to be allocated to land Portion of the purchase price to be allocated to land improvements $ 253,134 8% 9 24% 14% TBTF has a year end date of December 31. Required: Prepare the journal entries required by TBTF to account for the note on each of the following dates: January 2, 2022 December 31, 2024Jillian Inc. manufactures and installs customized equipment. On January 1, 2021, Jillian entered into a contract to sell equipment to a client for $800,000. This amount included installation. The company normally charges an additional fee for its installation services, but in this case, the installation was "bundled" with the equipment. The standalone value of the machinery was $750,000 while the cost of the installation was estimated at $100,000. Jillian had the equipment in its inventory on January 1, 2021. The equipment, which had a cost of $600,000, was customized (at no cost Jillan), and delivered to the client and installed on that date. Payment terms are as follows: January 1, 2021: $80,000 upon contract signing and delivery and installation. December 31, 2021; Balance due. Jillian Inc. follows IFRS and estimates that the interest rate for a similar financing arrangement would be 6%. Required: a. Apply the steps of IFRS 15 Revenue Recognition to this transaction. State each step…Late in December 2021, XYZ Corp. (XYZ), a publicly traded company, completed the manufacture of 600 air conditioners for LO Inc. (LO). Each unit retails for $1,200 and has a cost of $620. When advised of the pending shipment of the completed units, LO requested that XYZ hold the product, claiming LO's warehouse was full of merchandise for the holiday season. LO agreed to accept ownership of the product while XYZ held the product, and to reimburse XYZ for any incremental holding costs. Required: a) Prepare the journal entries that XYZ should record at December 31, 2021. b) Identify the type of transaction between LO and XYZ, and briefly discuss any related conditions.