Plant acquisitions for selected companies are as follows: 1. Sandhill Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $765,000. At the time of purchase, Torres’s assets had the following book and appraisal values: Book Value Appraisal Value Land $199,000 $151,000 Buildings 241,000 350,000 Equipment 373,000 373,000 Sandhill Industries decided to take the lower of the two values for each asset it acquired. The following entry was made: Land 151,000
Plant acquisitions for selected companies are as follows:
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1. |
Sandhill Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $765,000. At the time of purchase, Torres’s assets had the following book and appraisal values:
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2. |
Hari Enterprises purchased equipment by making a $2,000 cash down payment and signing a $22,300, one-year, 12% note payable. The purchase was recorded as follows:
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3. |
Kim Company purchased equipment for $20,900, terms 1/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was:
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4. |
Kaiser Inc. recently received land at zero cost from the Village of Chester as an inducement to locate its business in the village. The land’s appraised value was $33,200. The company made no entry to record the land because it had no cost basis. |
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5. |
Zimmerman Company built a warehouse for $667,000. It could have contracted out and purchased the building for $741,000. The controller made the following entry:
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REQUIREMENTS
- Prepare the entry that should have been made at the date of each acquisition.
- Prepare the correcting entry that is required in each case to correct the accounts. In other words, do not simply reverse the incorrect entry and replace it with the entry in the part above.
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