Question
Your client, Lohmann Co., had many property, plant, and equipment (PPE) transactions in the current year. You are recording the appropriate journal entries. To prepare
Your client, Lohmann Co., had many property, plant, and equipment (PPE) transactions in the current year. You are recording the appropriate journal entries.
To prepare each required journal entry:
- Click on a cell in the Account Name column and select from the option list the appropriate account. An account may be used once, more than once, or not at all.
- Enter the corresponding debit or credit amount in the associated column.
- Round all amounts to the nearest whole number.
- Not all rows in the table might be needed to complete each journal entry.
- If no journal entry is needed, check the No entry required box at the top of the table as your response.
1. On January 1, Lohmann purchased an office building and the land on which it is located by paying $800,000 cash and assuming an existing mortgage of $200,000. The property is assessed at $960,000 for real estate tax purposes, of which 60% is allocated to the building.
2. The building will be depreciated on a straight-line basis for 40 years.
3. On December 31, Lohmann determined that the building was impaired based on a recent crime spree near the building's location. The decline in the market price of the building is estimated to impair the building's carrying value by $85,000.
4. In an exchange that lacked commercial substance, Lohmann paid $50,000 and gave a plot of undeveloped land with a carrying amount of $320,000 and a fair value of $450,000 to Colby Co. in exchange for a building with a fair value of $500,000. The building was carried on Colby's books at $350,000.
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