Question

Plant acquisitions for selected companies are as follows.

1. Coronado Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $896,000. At the time of purchase, Torres’s assets had the following book and appraisal values. Book Values Appraisal Values Land $256,000 $192,000 Buildings 320,000 448,000 Equipment 384,000 384,000 To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. Land 192,000 Buildings 320,000 Equipment 384,000 Cash 896,000

2. Whispering Enterprises purchased store equipment by making a $2,560 cash down payment and signing a 1-year, $29,440, 10% note payable. The purchase was recorded as follows. Equipment 34,944 Cash 2,560 Notes Payable 29,440 Interest Payable 2,944

3. Metlock Company purchased office equipment for $20,800, terms 2/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was: Equipment 20,800 Cash 20,384 Purchase Discounts 416

4. Bonita Inc. recently received at zero cost land from the Village of Cardassia as an inducement to locate its business in the Village. The appraised value of the land is $34,560. The company made no entry to record the land because it had no cost basis.

5. Windsor Company built a warehouse for $768,000. It could have purchased the building for $947,200. The controller made the following entry. Buildings 947,200 Cash 768,000 Profit on Construction 179,200 Prepare the entry that should have been made at the date of each acquisition.

(Round intermediate calculations to 5 decimal palces, e.g. 0.56487 and final answers to 0 decimal places, e.g. 5,275. 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 0 for the amounts.)

Answer 1