Question

1. Whispering Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $868,000. At the time of purchase, Torres’s assets had the following book and appraisal values.

		Book Values			Appraisal Values
Land		$248,000			$186,000
Buildings		310,000			434,000
Equipment		372,000			372,000

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

Land		186,000
Buildings		310,000
Equipment		372,000
Cash				868,000

2. Metlock Enterprises purchased store equipment by making a $2,480 cash down payment and signing a 1-year, $28,520, 10% note payable. The purchase was recorded as follows.

Equipment		33,852
Cash				2,480
Notes Payable				28,520
Interest Payable				2,852

3. Bonita Company purchased office equipment for $19,000, 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		19,000
Cash				18,620
Purchase Discounts				380

4. Windsor 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 $33,480. The company made no entry to record the land because it had no cost basis.

5. Sheridan Company built a warehouse for $744,000. It could have purchased the building for $917,600. The controller made the following entry.

Buildings		917,600
Cash				744,000
Profit on Construction				173,600

Prepare the entry that should have been made at the date of each acquisition.

Answer 1