Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Chapter 11, Problem 11.4BE
To determine
To prepare:
Given information:
Amount of note issued to acquire custom-made refrigerator is $1,500,000.
Time period is 10 years.
Market interest rate is 5%.
Fair value of asset and note is not determinable.
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Ivanhoe Corp. sold property in exchange for a six-year note that has a maturity value of $34,615 and no stated interest rate. The
property originally cost Ivanhoe $18,060.
Assuming that a market interest rate of 9% is known, prepare the journal entry to record the sale of this property. (Credit account titles
are automatically indented when the 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. List all debit entries before credit entries. For calculation purposes, use 5 decimal places as displayed in the factor
table provided. Round answers to O decimal places, e.g. 5,275.)
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
Account Titles
Debit
Credit
A building with an appraisal value of $135,757 is made available at an offer price of $158,563. The purchaser acquires the property for $34,867 in cash, a 90-day note payable for $23,496, and a mortgage amounting to $58,384. The cost basis recorded in the buyer's accounting records to recognize this purchase is
Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. What journal entry is required for each situation ?
The equipment was purchased on account for $25,000. Credit terms were 2/10, n/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts.
Connors gave the seller a noninterest-bearing note. The note required payment of $27,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 10% properly reflects the time value of money in this situation.
Connors traded in old equipment that had a book value of $6,000 (original cost of $14,000 and accumulated depreciation of $8,000) and paid cash of $22,000. The old equipment had a fair value of $2,500 on the date of the exchange. The exchange has commercial substance.
Connors issued 1,000 shares of its no-par common stock…
Chapter 11 Solutions
Intermediate Accounting
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