Question

Exercise 10-6 Plant acquisitions for slected companies are as follows 1. Larkspur Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $742,000. At the time of purchase, Torres's assets had the following book and appraisal values Book Values $212,000 265,000 318,000 isal Values Land $159,000 371,000 318,000 Buildings To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. Land Buildings Equipment 159,000 265,000 318,000 Cash 742,000 2. Cullumber Enterprises purchased store equipment by making a $2,120 cash down payment and signing a 1-year, $24,380 10% note payable. The purchase was recorded as folo s. Equipment 23,938 Cash Notes Payable Interest Payable 2,120 24,380 2,438 3 Riverbed Company purchased office equipment for $20 800 terms 2/10, п 30. Because the company intended to take the discount, it made no entry until t paid for the acquisition. The entry was 20,800 Cash Purchase Discounts 20,384 416 4. Marin 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 $28,620. The company made no entry to record the land because it had no cost basis. 5. Headland Company buit a warehouse for $636,000. It could have purchased the building for $784,400. The controller made the following entry Buildings 784,400 Cash 636,000 148,400 Profit on Construction

Answer 1