Plant acquisitions for selected companies are as follows:

1.

Crane Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $767,000. At the time of purchase, Torress assets had the following book and appraisal values:

		Book Value		Appraisal Value
Land		$208,000		$151,000
Buildings		244,000		344,000
Equipment		372,000		372,000

Crane Industries decided to take the lower of the two values for each asset it acquired. The following entry was made:

Land			151,000
Buildings			244,000
Equipment			372,000
	Cash				767,000

Crane Industries expects the building structure to last another 20 years; however, it expects that it will have to replace the roof in the next five years. Torres Co. indicated that, on initial construction of the building, the roof amounted to 20% of the cost of the building. Because of the unique design and materials needed to replace the roof, the contractors stated that the roof structure is currently worth 17% of the value of the building purchase.

2.

Hari Enterprises purchased equipment by making a $1,600 cash down payment and signing a $27,800, one-year, 12% note payable. The purchase was recorded as follows:

Equipment			32,736
	Cash				1,600
	Notes Payable				27,800
	Interest Payable				3,336

3.

Kim Company purchased equipment for $23,800, 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			23,800
	Cash				23,324
	Purchase Discounts				476

4.

Kaiser Inc. recently received land at zero cost from the Village of Chester as an inducement to locate its business in the village. The lands appraised value was $27,700. The company made no entry to record the land because it had no cost basis.

5.

Zimmerman Company built a warehouse for $621,000. It could have contracted out and purchased the building for $760,000. The controller made the following entry:

Buildings			760,000
	Cash				621,000
	Sales Revenue				139,000

Prepare the correcting entry that is required in each case to correct the accounts. In other words, do not simply reverse the incorrect entry and replace it with the entry in the part above. (

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