Vaughn County owned an idle parcel of real estate consisting of land and a factory building. Vaughn gave title to this realty to Cullumber Company as an incentive for Cullumber to establish manufacturing operations in the County. Cullumber paid nothing for this realty, which had a fair value of $200000 at the date of the grant. Cullumber should record this nonmonetary transaction
Vaughn County owned an idle parcel of real estate consisting of land and a factory building. Vaughn gave title to this realty to Cullumber Company as an incentive for Cullumber to establish manufacturing operations in the County. Cullumber paid nothing for this realty, which had a fair value of $200000 at the date of the grant. Cullumber should record this nonmonetary transaction
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Vaughn County owned an idle parcel of real estate consisting of land and a factory building. Vaughn gave title to this realty to Cullumber Company as an incentive for Cullumber to establish manufacturing operations in the County. Cullumber paid nothing for this realty, which had a fair value of $200000 at the date of the grant. Cullumber should record this nonmonetary transaction as a
credit to Contribution Revenue for $200000.
credit to Comprehensive Income for $200000.
credit to Donated Capital for $200000.
memo entry only.
Expert Solution
Step 1
The accounting follows the double entry system where the effect of transaction is debited to an account as well credited to other account. So there would be two corresponding entries which leads to debit the reality value and credit to contribution revenue.
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