Financial Accounting Harborview Technologies acquired a building valued at$300,000 for property tax purposes in exchange for10,000 shares of $10 par common stock. The stock isselling for $25 per share. At what amount should thebuilding be recorded?

Step 1:The consideration paid for the assets is the record price of the assets. The building should…

Answered: Harborview Technologies acquired a…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter7: Property Transactions: Basis, Gain And Loss, And Nontaxable Exchanges

Section: Chapter Questions

Problem 32P

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Paula Company had the following property acquisitions during the current year: Acquired a tract of land and building in exchange for 50,000 ordinary shares of P100 par value with a market price of P120 per share on the date of acquisition. The last property tax bill indicated assessed value of P1,200,000 for the land and P2,800,000 for the building. However, the land has a fair value of P2,000,000 and the building has fair value of P3,500,000. Received land from a major shareholder as an inducement to locate a plant in the city. No payment was required but the entity paid P50,000 for legal expenses for land transfer. The land is fairly valued at P1,000,000. • Acquired a welding machine with an invoice price of P3,000,000 subject to a cash discount of 10% which was not taken. The entity incurred cost of P50,000 in removing the old welding machine prior to the installation of the new one. Welding supplies were acquired at a cost of P150,000. What is the total increase in property, plant…

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Harborview Technologies acquired a building valued at $300,000 for property tax purposes in exchange for 10,000 shares of $10 par common stock. The stock is selling for $25 per share. At what amount should the building be recorded?