Question
Question #4 (22 marks) Parts A, B and C are independent. Unless indicated otherwise, assume company is using IFRS. Part A. (4 marks) Scarlett Incorporated
Question #4 (22 marks) Parts A, B and C are independent. Unless indicated otherwise, assume company is using IFRS.
Part A. (4 marks)
Scarlett Incorporated purchased a tract of land with an office building and equipment included. The cash price was $900,000 plus $50,000 in fees connected with the purchase. The following data were collected concerning the property:
| Appraisal Value | Vendors Book Value | Original Cost |
Land | $220,000 | $ 80,000 | $ 80,000 |
Equipment | 360,000 | 170,000 | 550,000 |
Office building | 440,000 | 260,000 | 720,000 |
Required:
Give the entry to record the purchase; show computations.
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Part B. (4 marks)
Alpha Inc. exchanged machinery with an appraised value of $ 1,170,000, a recorded cost of
$1,800,000 and accumulated depreciation of $ 800,000, for machinery that Beta Corp. owns. Betas machinery has an appraised value of $ 1,140,000, a recorded cost of $2,160,000, and accumulated depreciation of $1,188,000. Beta also gave Alpha $30,000 in the exchange. Assume depreciation has been updated to the date of exchange.
Instructions
Prepare the entry on Alphas books assuming that the transaction has commercial substance.
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