Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tiktok Co. acquired a piece of factory equipment overseas on cash basis for 400,000. Additional costs incurred include the following: commission paid to broker for

Tiktok Co. acquired a piece of factory equipment overseas on cash basis for 400,000. Additional costs incurred include the following: commission paid to broker for the purchase of the equipment, 20,000; import duties of 100,000; non-refundable purchase taxes of 40,000; freight cost of transferring the equipment to Tiktok Co's premises, 4,000; costs of assembling and installing the equipment, 8,000; costs of testing the equipment, 6,000; administration and other general overhead costs, 16,800; and advertisement and promotion costs of the new product to be produced by the equipment, 15,200. The samples generated from testing the equipment were sold at 2,000.

1.How much is the initial cost of the equipment?

a.576,000

b.578,000

c.592,800

d.594,800

Insta Co. acquired land with fair value of4,000,000 in exchange for Insta's 10,000 shares with par value of 40 per share and quoted price of 360 per share.

2.How much gain (loss) should Insta Co. recognize on the exchange?

a.0

b.(400,000)

c.3,200,000

d.400,000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell

14th Edition

1119707110, 978-1119707110

More Books

Students also viewed these Accounting questions