Exercise 10-06 Plant acquisitions for selected companies are as follows. 1. Bridgeport Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $938,000. At the time of purchase, Torres's assets had the following book and appraisal values. Book Values Land $268,000 Buildings 335,000 Equipment 402,000 To be conservative, the company decided Land Buildings Equipment Cash Appraisal Values $201,000 469,000 402,000 to take the lower of the two values for each asset acquired. The following entry was made. 201,000 335,000 402,000 938,000 2. Indigo Enterprises Equipment Cash Notes Payable Interest Payable purchased store equipment by making a $2,680 cash down payment and signing a I-year, $30,820, 10% note payable. The purchase was recorded as follows. 36,582 2,680 30,820 3,082 3. Sweet Company purchased office equipment for $21,900, 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 Cash Purchase Discounts 21,900 21,462 438 4. Pharoah 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 $36,180. The company made no entry to record the land because it had no cost basis. 5. Novak Company built a warehouse for $804,000. It could have purchased the building for $991,600. The controller made the following entry. Buildings Cash Profit on Construction 991,600 804,000 187,600 Exercise 10-06 Plant acquisitions for selected companies are as follows. 1. Bridgeport Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $938,000. At the time of purchase, Torres's assets had the following book and appraisal values. Book Values Land $268,000 Buildings 335,000 Equipment 402,000 To be conservative, the company decided Land Buildings Equipment Cash Appraisal Values $201,000 469,000 402,000 to take the lower of the two values for each asset acquired. The following entry was made. 201,000 335,000 402,000 938,000 2. Indigo Enterprises Equipment Cash Notes Payable Interest Payable purchased store equipment by making a $2,680 cash down payment and signing a I-year, $30,820, 10% note payable. The purchase was recorded as follows. 36,582 2,680 30,820 3,082 3. Sweet Company purchased office equipment for $21,900, 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 Cash Purchase Discounts 21,900 21,462 438 4. Pharoah 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 $36,180. The company made no entry to record the land because it had no cost basis. 5. Novak Company built a warehouse for $804,000. It could have purchased the building for $991,600. The controller made the following entry. Buildings Cash Profit on Construction 991,600 804,000 187,600