A developer of a large shopping center donated a building and land to Hetting Co. without charge. The agreement provided that the company employ 350 people for 10 years. The land was appraised at $65,000 and the building at $44,000.

Required:

1.	Prepare the journal entry to record the acquisition of the land and building.
2.	Next Level How should the 10-year agreement be reported in the financial statements?
3.	Next Level If the title were not to pass until after 10 years, would your answers to Requirements 1 and 2 change?

How should the 10-year agreement be reported in the financial statements?

If material, the agreement to employ 350 people for 10 years _______________________.

a.) is discolsed in a note to the financial statements.

b.) is estimated and recorded as gain.

c.) is estimated and a reserve established

If the title were not to pass until after 10 years, would your answers to Requirements 1 and 2 change?

Select the correct answer.

a.) Even though title would not pass to the company for 10 years, land and building are still recorded on the books of the company. Disclosure of the contingency associated with the title is included in the notes to the financial statements.

b.) Because title would not pass to the company for 10 years, land and building are not recorded on the books of the company. Disclosure of the contingency associated with the title is included in the notes to the financial statements.