Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On 1 3 September 2 0 X 1 , Nitish Corp. s board of directors moved the company s operations into a newly constructed building

On 13 September 20X1, Nitish Corp.s board of directors moved the companys operations into a newly constructed building and declared its old building available for sale. The original cost of the old building was $18 million; it was 35% depreciated. Other information is as follows:
On 15 September, a professional appraisal of the old building estimated its value as $9 million.
On 24 September, Nitish engaged a commercial property developer to place the building on the market for $9 million. Despite some softness in the market the developer expects to be able to sell the building within the next nine months. The developer charges a commission of 8% on final sale.
By 31 December, the commercial real estate market had softened considerably. Although the developer held the official asking price at $9 million, Nitish and the developer agreed they would consider offers as low as $7.5 million.
Despite receiving several lowball offers from prospective buyers over the first two months of 20X2, Nitishs management did not accept any of the offers.
By 31 March 20X2, the end of Nitishs first reporting quarter, the market had improved considerably. The developer relisted the property at $10.5 million, its newly appraised value.
On 27 April 20X2, Nitishs board accepted an offer of $10.7 million.
Required:
Prepare the appropriate general journal entries to record the information above

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Undergraduates

Authors: Wallace

4th Edition

1618533088, 9781618533081

More Books

Students also viewed these Accounting questions