ant acquisitions for selected companies are as follows. 1. Pina Colada Corporation purchased a company car by making a $4,320 cash down payment and signing a 1-year, $19,200, 10% note payable. The purchase was recorded as follows. Automobiles 25,440 Cash 4,320 Notes Payable 19,200 Interest Payable 1,920 2. As an inducement to locate its new branch office in the city of Greenwood Acres, Blossom Co. received land and a building from the city at no cost. The appraised value of the land was $48,000. The appraised value of the building was $168,000. Since it paid nothing for the land and building, Blossom Co. made no journal entry to record the transaction. 3. Buffalo Corporation purchased warehouse shelving for $96,000, terms 1/10, n/30. At the purchase date, Buffalo intended to take the discount. Therefore, it made no entry until it paid for the acquisition. The entry was: Warehouse fixtures 96,000 Cash 95,040 Purchase Discounts 960 4. Sunland Company built a piece of equipment for its factory. The cost of constructing the equipment was $153,600. Sunland could have purchased the equipment for $182,400. The controller made the following entry. Equipment 182,400 Cash, Materials, etc. 153,600 Profir on Construction 28,800 5. Kingbird Inc. acquired land, buildings, and equipment from Sale Corp., for a lump-sum price of $960,000. The book values of the assets on Sale’s books at the date of purchase, as well as fair values for the assets, based on an appraisal performed shortly before the purchase, were as follows. Asset Book Value Fair Value Land $240,000 $336,000 Buildings 432,000 624,000 Equipment 480,000 288,000 Total $1,152,000 $1,248,000 The company decided to take the lower of the two values for each asset acquired. The following entry was made. Land 240,000 Buildings 432,000 Equipment 288,000 Cash 960,000
Plant acquisitions for selected companies are as follows.
1. Pina Colada Corporation purchased a company car by making a $4,320 cash down payment and signing a 1-year, $19,200, 10% note payable. The purchase was recorded as follows.
| Automobiles | 25,440 | |||
| Cash | 4,320 | |||
| Notes Payable | 19,200 | |||
| Interest Payable | 1,920 |
2. As an inducement to locate its new branch office in the city of Greenwood Acres, Blossom Co. received land and a building from the city at no cost. The appraised value of the land was $48,000. The appraised value of the building was $168,000. Since it paid nothing for the land and building, Blossom Co. made no
3. Buffalo Corporation purchased warehouse shelving for $96,000, terms 1/10, n/30. At the purchase date, Buffalo intended to take the discount. Therefore, it made no entry until it paid for the acquisition. The entry was:
| Warehouse fixtures | 96,000 | |||
| Cash | 95,040 | |||
| Purchase Discounts | 960 |
4. Sunland Company built a piece of equipment for its factory. The cost of constructing the equipment was $153,600. Sunland could have purchased the equipment for $182,400. The controller made the following entry.
| Equipment | 182,400 | |||
| Cash, Materials, etc. | 153,600 | |||
| Profir on Construction | 28,800 |
5. Kingbird Inc. acquired land, buildings, and equipment from Sale Corp., for a lump-sum price of $960,000. The book values of the assets on Sale’s books at the date of purchase, as well as fair values for the assets, based on an appraisal performed shortly before the purchase, were as follows.
| Asset |
Book Value
|
Fair Value
|
||||
| Land | $240,000 | $336,000 | ||||
| Buildings | 432,000 | 624,000 | ||||
| Equipment | 480,000 | 288,000 | ||||
| Total | $1,152,000 | $1,248,000 |
The company decided to take the lower of the two values for each asset acquired. The following entry was made.
| Land | 240,000 | |||
| Buildings | 432,000 | |||
| Equipment | 288,000 | |||
| Cash | 960,000 |
Prepare the entry that should have been made at the date of each acquisition.
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