Varal Co. is a retailer of furniture with annual sales revenue of $2,500,000. When Varal Co....
Varal Co. is a retailer of furniture with annual sales revenue of $2,500,000. When Varal Co. prepared its financial statements, it showed the cost of land the company owned as $500,000. The resale value is $600,000. Varal Co. should ____________.
Homework Answers
The answer is provided with respect the value to be recorded of Land in the financial statement of Varal Co. The answer is given taking into account Fair Vale Accounting Concept.
Property, Plant and Equipment (PP&E) is a non-current, tangible capital asset depicted in the balance sheet of a business which is utilized by the business to generate revenues and profits. PP&E plays a key part in the analysis of a company’s operations and future expenditures (especially with regards to capital expenditures). PP&E also help the business in taking financial decisions.
PP&E assets are tangible, identifiable, and expected to generate an economic return for the company for more than one year or one operating cycle (whichever is longer).
Formula: Net Property, Plant and Equipment = Gross Property, Plant and Equipment + Capital Expenditures – Accumulated Depreciation.
As per the Standard, the land is remeasured at fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date .
Cost of Land = $ 500,000
Resale Value = $ 600,000
Thus, Varal Co. should prepare the Financial Statements taken into consideration the resale value of the land i.e., $ 600,000.
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$2,000,000 of 10.5%, 10-year bonds. These bonds were issued on
January 1, 2019, and pay interest annually on each January 1. The
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