E10.6 (LO 1, 3) (Correction of Improper Cost Entries) Plant acquisitions for selected companies are as follows. 1. Belanna Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $700,000. At the time of purchase, Torres's assets had the following book and appraisal values. Book Values Appraisal Values Land $200,000 $150,000 Buildings 250,000 350,000 Equipment 300,000 300,000 To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. Land 150,000 Buildings 250,000 Equipment 300,000 Cash 700,000 2. Harry Enterprises purchased store equipment by making a $2,000 cash down payment and signing a 1.year, $23,000, 10% note payable. The purchase was recorded as follows. Equipment 27,300 Cash 2.000 Notes Payable 23,000 Interest Payable 2,300 3. Kim Company purchased office equipment for $20,000, terms 2/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was: Equipment 20,000 Cash 19,600 Purchase Discounts 4. Kaisson Inc. recently received at zero cost land from the Village of Cardassia as an inducement to locate its business in the Village. The appraised value of the land is $27,000. The company made no entry to record the land because it had no cost basis. 5. Zimmerman Company built a warehouse for $600,000. It could have purchased the building for $740,000. The controller made the following entry. 7400.000 Buildings 600,000 Cash Profit on Construction 140,000 400