Homework Answers
| A | |||
| Purchase cost | 5200000 | ||
| Add: Legal fees | 172000 | ||
| Add: Commission | 224000 | ||
| Add: Appraisal fees | 109000 | ||
| Acquisition cost | 5705000 | ||
| B | |||
| Land | 1597400 | =5705000*28% | |
| Buildings | 2510200 | =5705000*44% | |
| Equipment | 1597400 | =5705000*28% | |
| C | |||
| Debit | Credit | ||
| Land | 1597400 | ||
| Buildings | 2510200 | ||
| Equipment | 1597400 | ||
| Cash | 1711500 | =5705000*30% | |
| Notes payable | 3993500 |
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buildings and equipment for $4.5 million. The company pays $179,000
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fees. The land is estimated at 22%, the buildings are at 41%, and
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1. Marigold Industries Inc. acquired land,
buildings, and equipment from a bankrupt company, Torres Co., for a
lump-sum price of $770,000. At the time of purchase, Torres’s
assets had the following book and appraisal values.
Book Values
Appraisal Values
Land
$220,000
$165,000
Buildings
275,000
385,000
Equipment
330,000
330,000
To be conservative, the company decided to take the lower of the
two values for each asset acquired. The following entry was
made.
Land
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Buildings
275,000
Equipment
330,000
Cash
770,000
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