2. Gibbs Manufacturing Co. was incorporated on 1/2/19 but was unable to begin manufacturing activities until 8/1/17 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/19 per the books was as follows: Date 1/31/19 Item Land and dilapidated building Cost of removing building Legal fees Fire insurance premium payment Special tax assessment for streets Partial payment of new building 190,000 Final payment on building 190,000 General expenses Asset write-up $704,940 Amount $200,000 4,000 2/28/19 4/1/19 6,000 5,440 4,500 5/1/19 5/1/19 5/1/19 construction 8/1/19 construction 8/1/19 30,000 75,000 12/31/19 Additional information: 1. To acquire the land and building on 1/31/19, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $160. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material. 2.

2. Gibbs Manufacturing Co. was incorporated on 1/2/19 but was unable to begin manufacturing activities until 8/1/17 because new factory facilities were not completed until that date. The Land and Buildings account at 12/31/19 per the books was as follows: Date 1/31/19 Item Land and dilapidated building Cost of removing building Legal fees Fire insurance premium payment Special tax assessment for streets Partial payment of new building 190,000 Final payment on building 190,000 General expenses Asset write-up $704,940 Amount $200,000 4,000 2/28/19 4/1/19 6,000 5,440 4,500 5/1/19 5/1/19 5/1/19 construction 8/1/19 construction 8/1/19 30,000 75,000 12/31/19 Additional information: 1. To acquire the land and building on 1/31/19, the company paid $100,000 cash and 1,000 shares of its common stock (par value = $100/share) which is very actively traded and had a fair value per share of $160. When the old building was removed, Gibbs paid Kwik Demolition Co. $4,000, but also received $1,500 from the sale of salvaged material. 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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