- •108. On July 1, 2006, Jekel & Hyde Inc. Purchased land and incurred other costs relative to the construction of a new warehouse. A summary of economic activities is listed below:
- •Required:
- •Indicate the accounts that would be affected by the above transactions and the resulting balance in each account. Apply the interest on the construction loan to the cost of the building only.
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •In its 2004 annual report to shareholders, Boston Beer Co. Disclosed the following footnote:
- •E. Property, Plant and Equipment
- •128. Use a t- account to show the balances and changes during 2004 in Boston Beer's: Property, Plant and Equipment account and its Accumulated depreciation—Property, Plant & equipment account.
- •Required:
- •130. Use a t- account to show the balances and changes during 2004 in Plank Breweries:
- •Note 4 Property, Plant and Equipment
- •100. A summary of Klugman Company's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •101. A summary of London Fashion's December 31, 2006, accounts receivable aging schedule is presented below along with the estimated percent uncollectible for each age group:
- •114. Is there any evidence in Winchester's disclosures above that are consistent with earnings management?
- •Required:
- •121. Is there any evidence in hp's disclosures above that are consistent with earnings management?
- •100. Required:
- •101. Required:
- •104. Required:
- •105. Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •Required:
- •127. In its 2004 annual report to shareholders, Martin Marietta Materials, Inc. Included the following in its financial statement footnotes:
- •Note e: property, plant and equipment, net
- •In another footnote, the company reported:
Required:
Determine the capitalized cost of the equipment.
Answer:
|
Purchase price |
$365,000 |
|
Sales tax |
29,200 |
|
Freight |
5,600 |
|
Insurance-shipping |
800 |
|
Installation |
2,000 |
|
Testing |
700 |
|
Total cost of equipment |
$403,300 |
|
|
|
Learning Objective: 1 Level of Learning: 3
110. During the current year, Brewer Company purchased all of the outstanding common stock of Miller Inc. paying $12,000,000 cash. The book values and fair values of Miller's assets and liabilities acquired are listed below:
|
|
Book Value |
Fair Value |
|
Accounts receivable |
$1,800,000 |
$ 1,625,000 |
|
Inventories |
2,700,000 |
4,000,000 |
|
Property, plant, and equipment |
9,000,000 |
11,625,000 |
|
Accounts payable |
3,000,000 |
3,000,000 |
|
Bonds payable |
4,500,000 |
4,125,000 |
Required:
Prepare the journal entry to record the acquisition by Brewer Company.
Answer:
|
Accounts receivable |
1,625,000 |
|
|
|
|
|
|
Inventory |
4,000,000 |
|
|
Property, plant, and equipment |
11,625,000 |
|
|
Goodwill |
1,875,000 |
|
|
Accounts payable |
|
3,000,000 |
|
Bonds payable |
|
4,125,000 |
|
Cash |
|
12,000,000 |
Learning Objective: 1 Level of Learning: 3
111. On August 15, 2006, Willis Inc. purchased all of the outstanding common stock of Bork Inc. paying $7,400,000 cash. The book values and fair values of Willis' assets and liabilities are listed below:
|
|
Book Value |
Fair Value |
|
Accounts receivable |
$1,080,000 |
$ 975,000 |
|
Inventories |
1,620,000 |
2,400,000 |
|
Property, plant, and equipment |
5,400,000 |
6,975,000 |
|
Accounts payable |
1,800,000 |
1,800,000 |
|
Bonds payable |
2,700,000 |
2,475,000 |
Required:
Prepare the journal entry to record the acquisition by Willis Inc.
Answer:
|
Accounts receivable |
975,000 |
|
|
Inventory |
2,400,000 |
|
|
Property, plant, and equipment |
6,975,000 |
|
|
Goodwill |
1,325,000 |
|
|
Accounts payable |
|
1,800,000 |
|
Bonds payable |
|
2,475,000 |
|
Cash |
|
7,400,000 |
Learning Objective: 1 Level of Learning: 3
112. Watson Company purchased assets of Holmes Ltd. at auction for $1,300,000. An independent appraisal of the market value of the assets acquired is listed below:
|
Land |
$214,500 |
|
Building |
357,500 |
|
Equipment |
572,000 |
|
Inventories |
286,000 |