E10-16B (L03,4) (Asset Acquisition) Ogden Industries purchased the following assets and constructed a building as well. All this was done during the current year.

Assets 1 and 2

These assets were purchased as a lump sum for $186,000 cash. The following information was gathered.

Asset 3

This machine was acquired by making a $25,000 down payment and issuing a $75,000, 1-year, zero- interest-bearing note. The note is to be paid off in at the end of the first year. It was estimated that the asset could have been purchased outright for $91,000.

Asset 4

This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows.

Asset 5

Machinery was acquired by issuing 1,000 shares of $1 par value common stock. The stock was actively traded and had a market value of $7 per share.

Construction of Building

A building was constructed on land purchased last year at a cost of $120,000. Construction began on March 1 and was completed on September 1. The payments to the contractor were as follows.

To finance construction of the building, a $600,000, 10% construction loan was taken out on March 1. The loan was repaid on September 1. The firm had $400,000 of other outstanding debt during the year at a borrowing rate of 12%.

Instructions

Record the acquisition of each of these assets.

Depreciation to Date on Seller's Books Initial Cost on Book Value on Seller's Books $35,000 15,000 Appraised Value $160,000 40,000 Machinery Office furniture $65,000 25,000 $30,000 10,000 Cost of machinery traded Accumulated depreciation to date of sale Fair value of machinery trad Cash received Fair value of machinery acquired $150,000 60,000 96,000 76,000 Date $200,000 300,000 100,000 400,000