The following are transactions related to Producers Limited:
1. The City of Piedmont gives the company five hectares of land as a plant site. This land~ fair value is determined to be $92,000.
2. Producers issues 13,000 no par value common shares in exchange for land and buildings. The property has been appraised at a fair value of $1,630,000, of which 5407,000 has been allocated to land, 5887,000 to the structure of the buildings, $220,000 to the building HVAC heating, ventilation, air conditioning, and $116,000 to the interior coverings in the buildings (such as flooring). Producers' shares are not listed on any exchange, but a block of 100 shares was sold by a shareholder 12 months ago at $57 per share, and a block of 200 shares was sold by another shareholder 18 months ago at $33 per share.
3. No entry has been made to remove amounts for machinery constructed during the year that were charged to the accounts Inventory, Supplies, and Salaries and Wages Expense and should have been charged to plant asset accounts. The following information relates to the costs of the machinery that was constructed:
Construction materials used ................... $23,000
Direct materials used in calibrating the equipment .......... 625
Factory supplies used ...................... 980
Direct labour incurred ..................... 56,000
Additional variable overhead (over regular) caused by construction
of machinery, excluding factory supplies used (charged to Inventory) . 8,700
Fixed overhead rate applied to regular
manufacturing operations ............. 70% of direct labour cost
Cost of similar machinery if it had been purchased
from outside suppliers .................... 125,000
Instructions
Prepare journal entries on the books of Producers Limited to record these transactions. Assume that Producers Limited prepares financial statements in accordance with IFRS.