Homework

Homework Assignments Week 1

Walker week 1

For the course project, I decided to join group number two. This is revolving the Marvin Corporation and Valerie Corporation and a promise to unconditionally transfer a building. “On March 1, year 1, Marvin Corporation promises to unconditionally transfer a building that cost $125,000 with an appraised value of $175,000 to Valerie Corporation on March 1, year 2 for a vehicle that was recently purchased for $140,000. As of December 31, year 2, Marvin Corporation has not transferred title to the building. Marvin Corporation received the vehicle. How should Marvin Corporation and Valerie Corporation record these transactions?”My initial thoughts is that this was an interesting case. There are a lot of factors that come into play from the cost to appraised value to the title not being transferred. Research on nonmonetary transactions is needed. “The guidance in APB Opinion No. 29, Accounting for Nonmonetary Transactions, is based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged.” (FASB, n.d.).My first instinct would be that Marvin would be using the cost of $125,000 on it’s books for the building. Valerie would be using the appraised value of $175,000 on it’s books for the building because that is the fair value. Since the vehicle was $140,000, this would create a gain for Marvin and a loss for Valerie. However, the title not being transferred also throw some complications into the situation.

Michelle Week 1

Marvin Corporation and Valerie Corporation Asset Exchange Case 2 Analysis According to Devry (2019), “On March 1, year 1, Marvin Corporation promises to unconditionally transfer a building that cost $125,000 with an appraised value of $175,000 to Valerie Corporation on March 1, year 2 for a vehicle that was recently purchased for $140,000. As of December 31, year 2, Marvin Corporation has not transferred title to the building. Marvin Corporation received the vehicle. How should Marvin Corporation and Valerie Corporation record these transactions? “My initial thoughts regarding the proper recording of the transactions between Marvin Corporation and Valerie Corporation are as follows. This exchange would have to be evaluated whether it qualifies as a like-kind exchange. One of the requirements for a like-kind exchange is that the property given up and the property received must have been held for investment or for

MARVIN CORP AND VALERIE CORP CASE 2 ANALYSIS2productive use in a trade or business. In my opinion, the building and the vehicle would both be considered having productive use in a trade or business for both Marvin Corporation and Valerie Corporation. The second requirement is that the property exchanged should be of “like-kind.” One example of a like-kind exchange would be a business truck for a business truck. In this case, the exchange is between a building and a truck which are not “like-kind” so the transactions may not be recorded using the like-kind rules. Since there is a delay in the transfer of the title to the building from Marvin Corporation to Valerie Corporation, the rules for a deferred exchange would be considered. According to these rules, for Marvin Corporation to record a tax-free like-kind exchange in year 1, another building would have to be identified to be purchased within 45 days. Another factor to be considered in the recording of these transactions is the basis/value of the building and the vehicle since they both have been depreciated since Marvin Corporation and Valerie Corporation have owned them.

problem statement is usually one or two sentences to explain the problem your process improvement project will address. In general, a problem statement will outline the negative points of the current situation and explain why this matters. It also serves as a great communication tool, helping to get buy--in and support from others.?Compare each of the sentences/ looking for common themes and wording. 2. Start to write an improved statement using the common themes.Common Themes:How it will be journalizedWhen it will be journalizedWhen these transactions be recordedDid Marvin Corporation have intentions to transfer title to the building?Can Valerie Corp take the vehicle back from Marvin corp due to a false promise?Amount of gain or loss on the transfer of assets based on basis of assetsWhat effect will these entries have in year 1 and year 2Will a note be needed on the financial statements?Definition of a promise to unconditionally transfer.How does the fact that the title has not been transferred effect the accounting for the items?How is the building accounted for in the books of each corporation?How do two companies doing business with each other, view and record the same transactions in compliance with GAAP laws and regulations? What implications on the transactions are there on year 1 and year 2 financials?Does Valerie Corporation have an option to take on a court case for a “promise” not fulfilled?Can Valerie Corporation require Marvin Corporation to return the vehicle for “non-payment”?Two corporations made an agreement to exchange non-monetary assets. By the end of the year in which the exchange is to take place, only one corporation has fulfilled their obligation. How should Marvin Corporation and Valerie Corporation account for the transactions on their books?

Noel

Thought

The most important point to consider and keep in mind is that Marvin Corporation failed to transfer the building as per their agreement on 1st Mar Year 1 in exchange to the vehicle. However, in case Marvin Corporations fails completely to lay aside the building towards the Valarie Corporations as agreed, it will be upon the Valarie to decide the pathways to take with the existing incomplete transaction. First, they may consider, towards their books hold the transactions as an account receivable, with requirements such as the full cost of the vehicle should be settled as agreed since the amount matter. Second, the Valarie may consider their vehicle being returned. Either of the two actions leads the two corporation an abandoning state of the agreement reached altogether. Thus choosing between the two alternatives will eventually aids the Valerie Corporation at resolving the business issues facing the two corporations.