Question 3 Asset Valuation

Sandhill Industries Corp. purchased the following assets and also constructed a building. All this was done during the current year.

Assets 1 and 2 These assets were purchased together for $123,000 cash. The following information was gathered

Description	The initial cost on seller's Books	Depreciation to date on Seller's Books	Books on Seller's Books	Appraised value
Machinery	$115,000	$53,000	$62,000	$108,000
Office equipment	$61,000	$10,000	$51,000	$36,000

Asset 3

This machine was acquired by making a $9,800 down payment and issuing a $32,200, two-year, zero-interest-bearing note. The note is to be paid off in two $16,100 instalments made at the end of the first and second years. It was determined that the asset could have been purchased outright for $35,100.

Asset 4 A truck was acquired by trading in an older truck that has the same value in use. The newer truck has options that will make it more comfortable for the driver; however, the company remains in the same economic position after the exchange as before. Facts concerning the trade-in are as follows:

Cost of truck traded	$100,000
Accumulated depreciation to date of sale	$43,000
Fair market value of truck traded	$79,000
Cash received by Sandhill	$10,500
Fair market value of truck acquired	$75,000

Asset 5 Office equipment was acquired by issuing 160 common shares. The shares are actively traded and had a closing market price ta few days before the office equipment was acquired of $12.00 per share. Alternatively, the office equipment could have been purchased for a cash price of $1,920

Construction of Building A building was constructed on land that was purchased on January 1 at a cost of $142,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows

Date	Payment
Feb 1	$122,000
June 1	$367,000
Sept 1	$485,000
Nov 1	$107,000

To finance the construction of the building, a $615,000, 13% construction loan was taken out on February 1. At the beginning of the project, Sandhill invested a portion of the construction loan that was not yet expended and earned an investment income of $4,800. The loan was repaid on November 1 when the construction was completed. The firm had $194,000 of other outstanding debt during the year at a borrowing rate of 9% and a $191,000 loan payable outstanding at a borrowing rate of 7%. Hint: Remember that the land cost is part of the capitalization cost and take it as February 1st date for capitalization.

Required: Record the acquisition of each of these assets assuming that Sandhill prepares financial statements in accordance with IFRS. Prepare the journal entries separately for each acquisition. (It may be helpful to review Appendix 10B in the text and E10-2).