ROK Company purchased a car wash for $500,000. The fair market value of theassets acquired are as follows:Land: $200,000Building: $300,000Equipment: $100,000The book value of the assets were:Land: $200,000Building: $250,000Equipment:$50,000What are the appropriate amounts that Renner should record for the land,building and equipment, respecitvely?Land, $200,000: Building, $250,000; Equipment, $50,000O Land. $166.667; Building, $250,000; Equipment. $83,333O Land. $200,000: Building, $300,000; Equipment $100.000None of the above are correct.

When a company purchases an asset, it records the asset at its purchase price. However, when a…

Answered: ROK Company purchased a car wash for…

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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Tonto Company purchased all property for $280,000. The property included a building, equipment, and land. The building was appraised at $175,000, the land at $126,000, and the equipment at $49,000. Prepare the journal entry to record the property basket purchase.
Tea Tree Bay Ltd acquires a Gizmo Machine from Jetsons Ltd for the following consideration: 1) Cash: $20,000 2) Land: In the books of Tea Tree Bay Ltd the land is recorded at its cost of $100,000. It has a fair value of $140,000. 3) Equipment: In the books of Tea Tree Bay Ltd the equipment is recorded at a cost of $50,000. The equipment has an accumulated depreciation balance of $20,000. The fair value of the equipment is $23,000 4) Assumption of liability: Tea Tree Bay Ltd also agrees to assume the liability of Jetsons Ltd’s bank loan of $30,000 as part of the Gizmo Machine acquisition. 5) Other associated costs: Tea Tree Bay Ltd also spend $5,000 as the installation cost. Testing cost was $2,500. Transportation cost for the machine was $700. During first year of operation, the company paid $650 as the maintenance cost for the machine. Required: a) Calculate the acquisition cost of the Gizmo Machine that will be used as the base for future depreciation charge. b)…
Calculate and allocate basis for the following problems. 1. A property is acquired for a purchase price of $230,000 cash plus acquisition costs of $20,000. The tax assessment for this property is as follows: Assessed Value Land Improvements Total assessments $40,000 160,000 $200,000 a. What is the acquisition basis for this property? b. What is the allocation for land? c. What is the allocation for improvements?
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Carver Incorporated purchased a building and the land on which the building is situated for a total cost of $983,000 cash The land was appraised at $248 699 and the building at $881,751 Required: What is the accounting term for this type of acquisition? b. Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building Would the company recognize a gain on the purchase? d. Record the purchase in a horizontal statements model.
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Advanced Automotive pays $270,000 for a group purchase of land, building, and equipment. At the time of acquisition, the land has a current market value of $30,000, the building's current market value is $210,000, and the equipment's current market value is $60,000. Prepare a schedule allocating the purchase price of $270,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. Prepare a schedule allocating the purchase price of $270,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price. Begin by preparing a schedule allocating the purchase price of $270,000. (Do not enter the % sign within the input fields of the Percentage of Total Market column.) Asset Land Building Equipment Total Market…
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Carver Inc. purchased a building and the land on which the building is situated for a total cost of $700,000 cash. The land was appraised at $320,000 and the building at $480,000. Required What is the accounting term for this type of acquisition? Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building. Would the company recognize a gain on the purchase? Record the purchase in a horizontal statements model.

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