Question
Plant acquisitions for selected companies are as follows. 1. Flint Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a
Plant acquisitions for selected companies are as follows. 1. Flint Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $910,000. At the time of purchase, Torress assets had the following book and appraisal values.
Book Values | Appraisal Values | |||||
---|---|---|---|---|---|---|
Land | $260,000 | $195,000 | ||||
Buildings | 325,000 | 455,000 | ||||
Equipment | 390,000 | 390,000 |
To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.
Land | 195,000 | |||
Buildings | 325,000 | |||
Equipment | 390,000 | |||
Cash | 910,000 |
2. Buffalo Enterprises purchased store equipment by making a $2,600 cash down payment and signing a 1-year, $29,900, 10% note payable. The purchase was recorded as follows.
Equipment | 35,490 | |||
Cash | 2,600 | |||
Notes Payable | 29,900 | |||
Interest Payable | 2,990 |
3. Carla Company purchased office equipment for $19,200, 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 | 19,200 | |||
Cash | 18,816 | |||
Purchase Discounts | 384 |
4. Sarasota 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 $35,100. The company made no entry to record the land because it had no cost basis. 5. Ivanhoe Company built a warehouse for $780,000. It could have purchased the building for $962,000. The controller made the following entry.
Buildings | 962,000 | |||
Cash | 780,000 | |||
Profit on Construction | 182,000 |
Prepare the entry that should have been made at the date of each acquisition.
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