Question
Lake Co. purchases a two buildings (Building 1 and Building 2) and land in a group purchase from Ocean, Inc. Lake spends $15,000,000 in total.
Lake Co. purchases a two buildings (Building 1 and Building 2) and land in a group purchase from Ocean, Inc. Lake spends $15,000,000 in total. The fair market value of Building 1 is $6,000,000. The fair market value of Building 2 is $11,000,000 and the fair market value of the land is $3,000,000. The book value of the assets on Ocean Inc.s books are the following: Building 1: $4,000,000; Building 2: $4,000,000; Land: $2,000,000.
What journal entry will Lake Co. record upon acquisition of Building 1, Building 2 and the land?
options:
|
| Dr. Building 1 $4,500,000 Dr. Building 2 $8,250,000 Dr. Land $2,250,000 Cr. Cash $15,000,000 |
|
| Dr. Building 1 $4,500,000 Dr. Building 2 $8,250,000 Dr. Land $2,250,000 Cr. Cash $20,000,000 |
|
| Dr. Building 1 $6,000,000 Dr. Building 2 $11,000,000 Dr. Land $3,000,000 Cr. Cash $20,000,000 |
|
| Dr. Building 1 $6,000,000 Dr. Building 2 $11,000,000 Dr. Land $3,000,000 Cr. Cash $15,000,000 |
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Intermediate Accounting
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
10th Canadian Edition, Volume 1
978-1118735329, 9781118726327, 1118735323, 1118726324, 978-0176509736
