E10-16B (Asset Acquisition) Ogden Industries purchased the following assets and constructed a building as well. All this was done during the current year.
Assets 1 and 2
These assets were purchased as a lump sum for $186,000 cash. The following information was gathered.
Depreciation to
Initial Cost on Date on Seller’s Book Value on
Description Seller’s Books Books Seller’s Books Appraised Value
Machinery $65,000 $30,000 $35,000 $160,000
Office furniture 25,000 10,000 15,000 40,000
Asset 3
This machine was acquired by making a $25,000 down payment and issuing a $75,000, 1-year, zero-interestbearing
note. The note is to be paid off in at the end of the first year. It was estimated that the asset could
have been purchased outright for $91,000.
Asset 4
This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.)
Facts concerning the trade-in are as follows.
Cost of machinery traded $150,000
Accumulated depreciation to date of sale 60,000
Fair value of machinery traded 96,000
Cash received 20,000
Fair value of machinery acquired 76,000
Asset 5
Machinery was acquired by issuing 1,000 shares of $1 par value common stock. The stock had a market value of $7 per share.
Construction of Building
A building was constructed on land purchased last year at a cost of $120,000. Construction began on March 1 and was completed on September 1. The payments to the contractor were as follows.
Date Payment
3/1 $200,000
5/1 300,000
6/1 100,000
9/1 400,000
To finance construction of the building, a $600,000, 10% construction loan was taken out on March 1.
The loan was repaid on September 1. The firm had $400,000 of other outstanding debt during the year at
a borrowing rate of 12%.
Instructions
Record the acquisition of each of these assets.
Choose an academic level, add pages, and the paper type you want.
To reduce the cost of our essay writing services, select the lengthier deadline.
We can't believe we just said that to you.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more
Recent Comments