Question

Plant acquisitions for selected companies are as follows.

1. Crane Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $ 798,000. At the time of purchase, Torres’s assets had the following book and appraisal values.

		Book Values			Appraisal Values
Land		$ 228,000			$ 171,000
Buildings		285,000			399,000
Equipment		342,000			342,000

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

Land		171,000
Buildings		285,000
Equipment		342,000
Cash				798,000

2. Cheyenne Enterprises purchased store equipment by making a $ 2,280 cash down payment and signing a 1-year, $ 26,220,  10% note payable. The purchase was recorded as follows.

Equipment		31,122
Cash				2,280
Notes Payable				26,220
Interest Payable				2,622

3. Ayayai Company purchased office equipment for $ 21,500, 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		21,500
Cash				21,070
Purchase Discounts				430

4. Pina 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 $ 30,780. The company made no entry to record the land because it had no cost basis.

5. Grouper Company built a warehouse for $ 684,000. It could have purchased the building for $ 843,600. The controller made the following entry.

Buildings		843,600
Cash				684,000
Profit on Construction				159,600

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

S.no	General Journal	Debit	Credit
1	Land 798,000×171,000/912000= $349125	149,625
	Buildings 798,000×399,000/912000= $349125	349,125
	Equipment	299,250
	Cash		798,000
	171000+399000+342000 = 912000
2	Store Equipment	28,500
	Cash		2,280
	Note Payable		26220
3	Office Equipment	21070
	Accounts Payable ($21,500 × 0.98)		21070
4	Building	30,780
	Deferred Grant Revenue		30,780
5	Warehouse	684,000
	Cash		684,000