Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Sunland Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These
Sunland Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $230,000 cash. The following information was gathered. Description Machinery Equipment Initial Cost on Seller's Books $230,000 138,000 Depreciation to Date on Seller's Books $115,000 23,000 Cost of machinery traded Accumulated depreciation to date of sale Fair value of machinery traded Cash received Fair value of machinery acquired $230,000 92,000 184,000 Book Value on Seller's Books Asset 3: This machine was acquired by making a $23,000 down payment and issuing a $69,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $34,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $82,570. 23,000 $115,000 Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. 161,000 115,000 Appraised Value $207,000 69,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started