Question

lant acquisitions for selected companies are as follows.

1. Shamrock Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $1,050,000. At the time of purchase, Torres’s assets had the following book and appraisal values.

		Book Values			Appraisal Values
Land		$300,000			$225,000
Buildings		375,000			525,000
Equipment		450,000			450,000

To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.

Land		225,000
Buildings		375,000
Equipment		450,000
Cash				1,050,000

2. Bridgeport Enterprises purchased store equipment by making a $3,000 cash down payment and signing a 1-year, $34,500, 10% note payable. The purchase was recorded as follows.

Equipment		40,950
Cash				3,000
Notes Payable				34,500
Interest Payable				3,450

Indigo Company purchased office equipment for $19,400, 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		19,400
Cash				19,012
Purchase Discounts				388

4. Sweet 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 $40,500. The company made no entry to record the land because it had no cost basis.

5. Pharoah Company built a warehouse for $900,000. It could have purchased the building for $1,110,000. The controller made the following entry.

Buildings		1,110,000
Cash				900,000
Profit on Construction				210,000

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