Chapter 7, Problem 7.1S

LO 1

(Learning Objective 1: Measure the cost and book value of a company's plant assets) Examine the excerpt of a footnote from Albrecht Corporation’s September 30, 2018, annual report to follow

  1.    What are Albrecht’s largest two categories of property and equipment as of September 30, 2018? Describe in general terms the types of expenditures included in these categories

  2.    What was Albrecht’s gross cost of property and equipment at September 30, 2018? What was the book value of property and equipment on this date? Why is book value less than cost?

LO 1

S7-2 (Learning Objective 1: Measure and record the cost of Individual assets in a lump-sum purchase of assets) Lexington Garden Supply pays $280,000 for a group purchase of land, building, and equipment. At the time of acquisition, the land has a current market value of $124,000, the building’s current market value is $31,000, and the equipment’s current market value is $155,000 Prepare a schedule allocating the purchase price of $280,000 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.