Required:

Prepare the journal entry to record the purchase of the assets.

Answer:

	Appraised		Allocated
	Values	Percent	Costs
Land	$ 214,500	15%	$ 195,000
Building	357,500	25	325,000
Equipment	572,000	40	520,000
Inventory	286,000	20	260,000
	$1,430,000	100%	$1,300,000
Land	195,000
Building	325,000
Equipment	520,000
Inventory	260,000
Cash			1,300,000

Learning Objective: 2 Level of Learning: 3

113. Eli Company purchased assets of Whitney Inc. at auction for $1,560,000. An independent appraisal of the market value of the assets acquired is listed below:

Land	$171,600
Building	514,800
Equipment	600,600
Inventories	429,000

Required:

Prepare the journal entry to record the purchase of the assets.

Answer:

	Appraised		Allocated
	Values	Percent	Costs
Land	$171,600	10%	$156,000
Building	514,800	30	468,000
Equipment	600,600	35	546,000
Inventory	429,000	25	390,000
	$1,716,000	100%	$1,560,000
Land	156,000
Building	468,000
Equipment	546,000
Inventory	390,000
Cash			1,560,000

Learning Objective: 2 Level of Learning: 3

114. Beacon Inc. received a gift of land and building in the Twin Pines Park as an inducement to relocate. The land and buildings have fair market values of $45,000 and $455,000.

Required: Prepare journal entries to record the above transactions.

Answer:

Land	45,000
Buildings	455,000
Revenue-donation of assets		500,000

Learning Objective: 4 Level of Learning: 3

115. Cool Globe Inc. entered into two transactions, as follows:

1. They purchased equipment paying $20,000 down and signed a noninterest-bearing note requiring the balance to be paid in four annual installments of $20,000 on the anniversary date of the contract. Based on Bright Light's 12% borrowing rate for such transactions, the implicit interest cost is $19,253.

2. They purchased a tract of land in exchange for $10,000 cash down payment and a noninterest-bearing note requiring five $10,000 annual payments, with the first annual payment in one year. The fair market value of the land is $46,000.