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Record the acquisition of each of these assets. (Ra

Record the acquisition of each of these assets. (Ra

FINANCIAL ACCOUNTING
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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Assets 1 and 2: These assets were purchased as a lump sum for $300,000 cash. The following information was gathered. Initial Cost on Depreciation to Date on Seller's Books Book Value on Description Seller's Books Seller's Books Appraised Value Machinery $300,000 $150,000 $150,000 $270,000 Equipment 180,000 30,000 150,000 90,000 Asset 3: This machine was acquired by making a $30,000 down payment and issuing a $90,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $45,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $107,700. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $300,000 Accumulated depreciation to date of sale 120,000 Fair value of machinery traded 240,000 Cash received 30,000 Fair value of machinery acquired 210,000 Asset 5: Equipment was acquired by issuing 100 shares of $24 par value common stock. The stock had a market price of $33 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $450,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment search
Transcribed Image Text:Assets 1 and 2: These assets were purchased as a lump sum for $300,000 cash. The following information was gathered. Initial Cost on Depreciation to Date on Seller's Books Book Value on Description Seller's Books Seller's Books Appraised Value Machinery $300,000 $150,000 $150,000 $270,000 Equipment 180,000 30,000 150,000 90,000 Asset 3: This machine was acquired by making a $30,000 down payment and issuing a $90,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $45,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $107,700. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $300,000 Accumulated depreciation to date of sale 120,000 Fair value of machinery traded 240,000 Cash received 30,000 Fair value of machinery acquired 210,000 Asset 5: Equipment was acquired by issuing 100 shares of $24 par value common stock. The stock had a market price of $33 per share. Construction of Building: A building was constructed on land purchased last year at a cost of $450,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment search
Date Payment 2/1 $360,000 6/1 1,080,000 9/1 1,440,000 11/1 300,000 To finance construction of the building, a $1,800,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $600,000 of other outstanding debt during the year at a borrowing rate of 8%. Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Acquisition of Assets 1 and 2 Acquisition of Asset 3 re to search
Transcribed Image Text:Date Payment 2/1 $360,000 6/1 1,080,000 9/1 1,440,000 11/1 300,000 To finance construction of the building, a $1,800,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $600,000 of other outstanding debt during the year at a borrowing rate of 8%. Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places e.g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit Acquisition of Assets 1 and 2 Acquisition of Asset 3 re to search
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