CPAnet Forum: Property Dividends

Active Topics

Memberlist

Help

FAR STUDY GROUP
CPAnet Forum : FAR STUDY GROUP

Topic: Property Dividends (

Topic Closed)

Author

Message

<< Prev Topic | Next Topic >>

CPASTONE
Contributor

Joined: 12 Jul 2010
Online Status: Offline
Posts: 95

Posted: 21 Jul 2010 at 03:50 \| IP Logged

Property dividends require assets to restated as fair value and becker has suggested following JE assuming

Building is distributed as dividend.
Cost 70, Accumulated depreciation 20
FV 100

Dr.Retained Earnings 100
Dr.Accumulated Depreciation 20
Cr.Building 70
Cr.Gain on Appreciation 50

Is it possible to break this composite entry by including dividend payable account?

If yes pls tell me how? Thanks so much

__________________
CPASTONE
FAR- 7/30/10 -pass
Audit-05/26/10 -pass
Reg-05/21/10- pass
Bec-08/31/10-pass

Tajik4CPA
Regular
Regular

Joined: 15 Oct 2009
Online Status: Offline
Posts: 238

Posted: 21 Jul 2010 at 09:30 \| IP Logged

Probably not since no cash is involved.

__________________
FAR - 92
AUD - 82
REG - 83
BEC - 90

Becker 2009 and Gleim 2010, Wiley 13.0

amu7
Major Contributor

Joined: 22 May 2009
Online Status: Offline
Posts: 392

Posted: 21 Jul 2010 at 10:05 \| IP Logged

I think of it as follows-

When divd is declared
Dr: RE 100 (FMV of bldg)
Cr: D/P 100

Property distributed as divd is appreciated to its FMV on declaration, so
Dr: Bldg 50
Cr: Gain on appreciation 50

When divd is paid
Dr: D/P 100
Cr: Bldg 100

So combined entry would be -
Dr: RE 100
Cr: Bldg 50
Cr: Gain 50

alternatively bldg of 50 can be written as
Bldg 70
AD (20)
= NBV 50
So the above entry becomes
Dr: RE 100
Dr: AD 20
Cr: Bldg 70
Cr: Gain 50

This is what I think, you might want to confirm.

1tryCPA
Major Contributor

Joined: 27 Jun 2010
Online Status: Offline
Posts: 337

Posted: 21 Jul 2010 at 12:31 \| IP Logged

I think Dividends payable account is not used.

We should use Property dividend distributable account - the same liability, but no D/P as no cash as Tajik4CPA said

__________________
FAR - 07/09/10 - {95}
AUD - 10/02/10 - {96}
BEC - 11/29/10 - {92}
REG - 05/23/11 - {75 would be enough}90 unbelievable, and I AM DONE!!!
______________
Wiley book/Gleim CD/Gleim simulations

CPASTONE
Contributor

Joined: 12 Jul 2010
Online Status: Offline
Posts: 95

Posted: 21 Jul 2010 at 12:41 \| IP Logged

Thanks everyone for the help :)

__________________
CPASTONE
FAR- 7/30/10 -pass
Audit-05/26/10 -pass
Reg-05/21/10- pass
Bec-08/31/10-pass

Page of 2 Next >>

Printable version

You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot delete your posts in this forum
You cannot edit your posts in this forum
You cannot create polls in this forum
You cannot vote in polls in this forum