Blossom Industries Corp. purchased the following assets and also constructed a building. All this was done during the current year using a variety of financing alternatives.

Assets 1 and 2

These assets were purchased together for $124,000 cash. The following information was gathered:

Description Initial Cost on

Sellers Books Depreciation

to Date on

Sellers Books Book Value on

Sellers Books Appraised

Value

Machinery $111,000 $53,000 $58,000 $90,000

Equipment 62,000 10,000 52,000 30,000

Asset 3

This machine was acquired by making a $10,200 down payment and issuing a $30,000, two-year, zero-interest-bearing note. The note is to be paid off in two $15,000 instalments made at the end of the first and second years. It was determined that the asset could have been purchased outright for $34,200.

Asset 4

A truck was acquired by trading in an older truck that has the same value in use. The newer truck has options that will make it more comfortable for the driver; however, the company remains in the same economic position after the exchange as before. Facts concerning the trade-in are as follows:

Cost of truck traded $108,000

Accumulated depreciation to date of exchange

38,000

Fair market value of truck traded 87,000

Cash paid by Blossom 9,200

Fair market value of truck acquired 70,000

Asset 5

Equipment was acquired by issuing 160 common shares. The shares are actively traded and had a closing market price a few days before the equipment was acquired of $10 per share. Alternatively, the equipment could have been purchased for a cash price of $1,575.

Construction of Building

A building was constructed on land that was purchased January 1 at a cost of $146,000. Construction began on February 1 and was completed November 1. The payments to the contractor were as follows:

Date Payment

Feb. 1 $120,000

June 1 372,000

Sept. 1 474,000

Nov. 1 105,000

1. Ex :

To finance construction of the building, a $617,000, 13% construction loan was taken out on February 1. At the beginning of the project, Blossom invested the portion of the construction loan that was not yet expended and earned investment income of $4,600. The loan was repaid on November 1 when the construction was completed. The firm had $204,000 of other outstanding debt during the year at a borrowing rate of 10% and a $202,000 loan payable outstanding at a borrowing rate of 6%.

Blossom uses a variety of alternatives to finance its acquisitions. Record the acquisition of each of these assets, assuming that Blossom prepares financial statements in accordance with IFRS. Use the net amount to record the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round capitalization rate to 2 decimal places, e.g. 52.75% and final answers to 0 decimal places, e.g.

2. Ex :

Effective interest rate

Enter your answer in accordance to the question statement %

Blossom Industries Corp. purchased the following assets and also constructed a building. All this was done during the current year using a variety of financing alternatives. Assets 1 and 2 These assets were purchased together for $124.000 cash. The following information was gathered: Initial Cost on Description Seller's Books Machinery $111.000 Equiprtent 62,000 Depreciation to Date on Seller's Books $53,000 Book Value on Seller's Books $58,000 Appraised Value $90,000 30,000 10,000 52,000 Asset 3 This machine was acquired by making a $10.200 down payment and issuing a $30,000, two-year, zero-interest-bearing note. The note is to be paid off in two $15,000 instalments made at the end of the first and second years. It was determined that the asset could have been purchased outright for $34,200. Asset 4 A truck was acquired by trading in an older truck that has the same value in use. The newer truck has options that will make it more comfortable for the driver, however, the company remains in the same economic position after the exchange as before. Facts concerning the trade-in are as follows: $108,000 38,000 Cost of truck traded Accumulated depreciation to date of exchange Fair market value of truck traded Cash paid by Blossom Fair market value of truck acquired 87,000 9.200 70,000 Asset 5 Equipment was acquired by Issuing 160 common shares. The shares are actively traded and had a closing market price a few days before the equipment was acquired of $10 per share. Alternatively, the equipment could have been purchased for a cash price of $1,575. a Equipment was acquired by issuing 160 common shares. The shares are actively traded and had a closing market price a few days before the equipment was acquired of $10 per share. Alternatively, the equipment could have been purchased for a cash price of $1,575. Construction of Building A building was constructed on land that was purchased January 1 at a cost of $146,000. Construction began on February 1 and was completed November 1. The payments to the contractor were as follows: Date Payment $120,000 Feb. 1 June 1 372,000 Sept. 1 474,000 Nov. 1 105,000 To finance construction of the building, a $617,000, 13% construction loan was taken out on February 1. At the beginning of the project, Blossom invested the portion of the construction loan that was not yet expended and earned investment income of $4,600. The loan was repaid on November 1 when the construction was completed. The firm had $204,000 of other outstanding debt during the year at a borrowing rate of 10% and a $202,000 loan payable outstanding at a borrowing rate of 6%. Blossom uses a variety of alternatives to finance its acquisitions. Record the acquisition of each of these assets. assuring that Blossom prepares financial statements in accordance with IFRS. Use the net amount to record the note. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter for the amounts. Round capitalization rate to 2 decimal places. e.s. 52.75% and final answers to o decimal places, e.3.5,275.) Account Titles and Explanation Debit Credit Acquisition of Assets 1 and 2 Acquisition of Asset 3 Acquisition of Asset 4 Acquisition of Asset 5 Construction of Building eTextbook and Media What was the effective interest rate used in negotiating the note payable used to acquire the machinery in Asset 3? Use Excel or a financial calculator to arrive at your answer. (Round final answer to 3 decimal places, e,8. 1.234%.) Effective interest rate % eTextbook and Media List of Accounts