Pressler Company planned to erect a new factory building and a new office building in Atlanta, Georgia.
Question:
Pressler Company planned to erect a new factory building and a new office building in Atlanta, Georgia. A report on a suitable site showed an appraised value of \(\$ 180,000\) for land and orchard and \(\$ 120,000\) for a building.
After considerable negotiation, the company and the owner reached the following agreement: Pressler Company was to pay \(\$ 216,000\) in cash, assume a \(\$ 90,000\) mortgage note on the property, assume the interest of \(\$ 1,920\) accrued on the mortgage note, and assume unpaid property taxes of \(\$ 13,200\). Pressler Company paid \(\$ 18,000\) cash for brokerage and legal services in acquiring the property.
Shortly after acquisition of the property, Pressler Company sold the fruit on the trees for \(\$ 2,640\), remodeled the building into an office building at a cost of \(\$ 38,400\), and removed the trees from the land at a cost of \(\$ 9,000\). Construction of the factory building was to begin in a week.
Prepare schedules showing the proper valuation of the assets acquired by Pressler Company.
Step by Step Answer:
Financial Accounting A Business Perspective
ISBN: 9780072289985
7th Edition
Authors: Roger H. Hermanson, James Don Edwards