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Exercise 10-06 Plant acquisitions for selected companies are as follows. 1. Belanna Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co.,

Exercise 10-06

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, Torress 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 400

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.

Buildings 740,000
Cash 600,000
Profit on Construction 140,000

Prepare the entry that should have been made at the date of each acquisition. (Round intermediate calculations to 5 decimal palces, e.g. 0.56487 and final answers to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when 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.)

No.

Account Titles and Explanation

Debit

Credit

1.

enter an account title for the first transaction

enter a debit amount

enter a credit amount

enter an account title for the first transaction

enter a debit amount

enter a credit amount

enter an account title for the first transaction

enter a debit amount

enter a credit amount

enter an account title for the first transaction

enter a debit amount

enter a credit amount

2.

enter an account title for the second transaction

enter a debit amount

enter a credit amount

enter an account title for the second transaction

enter a debit amount

enter a credit amount

enter an account title for the second transaction

enter a debit amount

enter a credit amount

3.

enter an account title for the third transaction

enter a debit amount

enter a credit amount

enter an account title for the third transaction

enter a debit amount

enter a credit amount

4.

enter an account title for the fourth transaction

enter a debit amount

enter a credit amount

enter an account title for the fourth transaction

enter a debit amount

enter a credit amount

5.

enter an account title for the fifth transaction

enter a debit amount

enter a credit amount

enter an account title for the fifth transaction

enter a debit amount

enter a credit amount

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