Please can i get the answer to the attached file..
Case No. 1 Kang Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an effort to expand its production capacity to meet increased demand for its product, the company recently made several acquisitions of plant and equipment. Rob Joffery, a newly hired fixed-asset accountant, requested Danny Nolte, Kang's controller, review the following transactions. Transaction 1: On June 1, 2015, Kang Company purchased equipment from Wynadot Corporation. Kang Issued a HK$28,000, 4-year, zero-interest-bearing note to Wynadot for the new equipment. Kang will pay off the note in four equal installments due at the end of each of the next four years. At the date of the transaction, the prevailing market rate of interest for obligations of this nature was 10%. Freight costs of HK$425 and installation costs of HK$500 were incurred in completing this transaction. The appropriate factors for the time value of money at a 10% rate of interest are given below. Future value of HK$1 for 4 periods: 1.46 Future value of an ordinary annuity for 4 periods: 4.64 Present value of HK$1 for 4 periods: 0.68 Present value of an ordinary annuity for 4 periods: 3.17 Transaction 2: On December 1, 2015, Kang Company purchased several assets of Yakima Shoes Inc., a small shoe manufacturer, whose owner was retiring. The purchase amounted to HK$220,000 and included the assets listed below. Kang engaged the services of Tennyson Appraisal Inc., an independent appraiser, to determine the fair values of the assets which are presented below. Yakima book value Fair value Inventory HK$ 60,000 HK$ 50,000 Land 40,000 80,000 Buildings 70,000 120,000 HK$ 170,000 HK$ 250,000 During its fiscal year ended May 31, 2016, Kang incurred HK$8,000 interest expense in connection with the financing of these assets. Transaction 3: On March 1, 2016, Kang Company exchanged a number of used trucks plus cash for vacant land adjacent to its plant site. The exchange has commercial substance. Kang intends to use the land for parking lot. The trucks have combined book value of HK$35,000, as Kang had recorded HK$20,000 of accumulated depreciation against those assets. Kang's purchasing agent, who has had previous dealings in the second-hand market, indicated that the trucks had a fair value of HK$46,000 at the time of the transaction. In addition to the trucks, Kang paid HK$19,000 cash for the land. Instructions (a) Plant assets such as land, buildings, and equipment receive special accounting treatment. Describe the major characteristics of these assets. (b) For each of the three transactions described above, determine the value at which Kang Company should record the acquired assets. Support your calculations with an explanation of the underlying rationale. (c) The books of the Kang Company show the following additional transactions for the fiscal year ended May 31, 2016. 1. Acquisition of a building for speculative purposes. 2. Purchase of a two-year insurance policy covering plant equipment. 3. Purchase of the rights for the exclusive use of a process used in the manufacture of ballet shoes. For each of the transactions, indicate whether the asset should be classified as a plant asset. If it is a plant asset, explain why it is. If it is not a plant asset, explain why not, and identify the proper
