Concord 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 $180,000 cash. The following information was gathered.
Description
Initial Cost on
Seller’s Books
Depreciation to
Date on Seller’s Books
Book Value on
Seller’s Books
Appraised Value
Machinery $180,000 $90,000 $90,000 $162,000
Equipment 108,000 18,000 90,000 54,000
Asset 3: This machine was acquired by making a $18,000 down payment and issuing a $54,000, 2-year, zero-interest-bearing note. The note is to be paid off in two $27,000 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $64,620.
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 $180,000
Accumulated depreciation to date of sale 72,000
Fair value of machinery traded 144,000
Cash received 18,000
Fair value of machinery acquired 126,000
Asset 5: Equipment was acquired by issuing 100 shares of $14 par value common stock. The stock had a market price of $20 per share.
Construction of Building: A building was constructed on land purchased last year at a cost of $270,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows.
Date
Payment
2/1 $216,000
6/1 648,000
9/1 864,000
11/1 180,000
To finance construction of the building, a $1,080,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $360,000 of other outstanding debt during the year at a borrowing rate of 8%.
Record the acquisition of each of these assets. (Round intermediate calculations to 5 decimal places, e. g. 1.25124 and final answer to 0 decimal places e. g. 58,971. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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