1. Natchez Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Vivace Co., for a lump-sum price of $1,000,300. At the time of purchase, Vivace's assets had the following book and appraisal values.
- Book Values Appraisal Values
- Land $285,800 $214,350
- Buildings 357,250 500,150
- Equipment 428,700 428,700
To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.
- Land 214,350
- Buildings 357,250
- Equipment 428,700
- Cash 1,000,300
2. Arawak Enterprises purchased store equipment by making a $2,858 cash down payment and signing a 1-year, $32,867, 10% note payable. The purchase was recorded as follows.
- Store Equipment 39,012
- Cash 2,858
- Note Payable 32,867
- Interest Payable 3,287
3. Ace Company purchased office equipment for $22,000, terms 2/10, n/30. Because the company intended to take the discount, it made no entry until it paid for the acquisition. The entry was:
- Office Equipment 22,000
- Cash 21,560
- Purchase Discounts 440
4. Paunee 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 $38,583. The company made no entry to record the land because it had no cost basis.
5. Mohegan Company built a warehouse for $857,400. It could have purchased the building for $1,057,460. The controller made the following entry.
- Warehouse 1,057,460
- Cash 857,400
- Profit on Construction 200,060
Prepare the entry that should have been made at the date of each acquisition