Question
Recording Land Acquisition Costs The following four cases are descriptions of land purchases. For each separate case: a. Determine the cost used for recording the
Recording Land Acquisition Costs
The following four cases are descriptions of land purchases. For each separate case: a. Determine the cost used for recording the land acquired b. Record the journal entry on the date of the land's acquisition
- Case One
- Case Two
- Case Three
- Case Four
1. At the midpoint of the current year, a $40,000 check is given for land, and the buyer assumes the liability for unpaid taxes in arrears of $1,000 at the end of last year and those assessed for the current year of $900.
a. Determine the cost used for recording the land acquired.
Cost of land |
b. Record the journal entry on the date of the land's acquisition. Note: Record your credit accounts in alphabetical order using the first letter of the account name.
Account Name | Dr. | Cr. |
---|---|---|
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A |
2. A company issues 14,000 shares of $1 par common stock with a fair value of $6 per share (based upon a recent sale of 10 shares) for land. The land is recently appraised at $80,000 by independent and competent appraisers.
a. Determine the cost used for recording the land acquired.
Cost of land |
b. Record the journal entry on the date of the land's acquisition. Note: Record your credit accounts in alphabetical order using the first letter of the account name.
Account Name | Dr. | Cr. |
---|---|---|
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A |
3. A company's offer to purchase land for $8,000 cash two years ago was rejected. Instead, the company acquires the land by issuing 1,000 shares of $1 par common stock (fair value of the stock is $7.80 per share based on several recent large transactions under normal weekly stock trading volume).
a. Determine the cost used for recording the land acquired.
Cost of land |
b. Record the journal entry on the date of the land's acquisition. Note: Record your credit accounts in alphabetical order using the first letter of the account name.
Account Name | Dr. | Cr. |
---|---|---|
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A |
4. A company issues 1,000 shares of $40 par common stock for land. The fair value was $60 per share at the time of the land purchase (stock sells regularly with an average daily volume of 5,000 shares). he seller had earlier offered to sell the land for $59,000 cash. Competent appraisers value the land at $61,000.
a. Determine the cost used for recording the land acquired.
Cost of land |
b. Record the journal entry on the date of the land's acquisition. Note: Record your credit accounts in alphabetical order using the first letter of the account name.
Account Name | Dr. | Cr. |
---|---|---|
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A | ||
CashPrepaid InsuranceEquipmentBuildingLandConstruction in ProcessAccumulated DepreciationAccounts PayableProperty Tax PayableAsset Retirement ObligationNote PayableDiscount on Note PayableCommon StockPaid-in Capital in Excess of ParCommon StockContribution RevenueGain on Asset ExchangeAccretion ExpenseDepreciation ExpenseInsurance ExpenseInterest ExpenseRepair ExpenseLoss on Asset ExchangeLoss on Asset ReplacementLoss Construction of BuildingLoss on DisposalLoss on Settlement of Asset Retirement ObligationN/A |
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