FrostFrost Enterprises buys a warehouse for $ 530 comma 000$530,000 to use for its East Coast distribution operations. On the date of the purchase, a professional appraisal shows a value of $ 580 comma 000$580,000 for the warehouse. The seller had originally purchased the building for $ 520 comma 000$520,000. FrostFrost has a similar warehouse on the West Coast that has a book value of $ 544 comma 000$544, 000. Under the historical cost principle, FrostFrost should record the building for

FrostFrost Enterprises buys a warehouse for $ 530 comma 000$530,000 to use for its East Coast distribution operations. On the date of the purchase, a professional appraisal shows a value of $ 580 comma 000$580,000 for the warehouse. The seller had originally purchased the building for $ 520 comma 000$520,000. FrostFrost has a similar warehouse on the West Coast that has a book value of $ 544 comma 000$544, 000. Under the historical cost principle, FrostFrost should record the building for

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter9: Acquisitions Of Property

Section: Chapter Questions

Problem 42P

See similar textbooks

Similar questions

Utica Corporation paid 360,000 to purchase land and a building. An appraisal showed that the land is worth 100,000 and the building is worth 300,000. What cost should Utica assign to the land and to the building, respectively?
Garcia Co. owns equipment that costs $150,000, with accumulated depreciation of $65,000. Garcia sells the equipment for cash. Record the journal entry for the sale of the equipment if Garcia were to sell the equipment for the following amounts: A. $90,000 cash B. $85,000 cash C. $80,000 cash
Hoot Enterprises buys a warehouse for $590,000 to use for its East Coast distributionoperations. On the date of the purchase, a professional appraisal shows a value of $650,000for the warehouse. The seller had originally purchased the building for $480,000. Hoothas a similar warehouse on the West Coast that has a book value of $603,000. Under thehistorical cost principle, Hoot should record the building fora. $650,000.b. $480,000.c. $590,000.d. $603,000.
Pointer Company buys a piece of property in north Toronto that has the following costs associated with the purchase: Invoice price for land and building = $303,500 Legal fees associated with the purchase = $12,000 Unpaid property taxes assumed by Pointer as part of the purchase agreement = $28,000 Cost of having property professionally appraised = $10,350 The appraisal report shows the building has an appraised market value of $400,000 and the land has an appraised value of $100,000. Required 1: What amount should be capitalized as the value of the land on Pointer's book? $ Required 2: What amount should be capitalized as the value of the building on Pointer's book? $ Required 3: If the property acquired will be depreciated in 40 years with no residual value (assume the straight-line depreciation is used), what is the depreciation expense for the first full year of use? $
Fresh Veggies, Inc. (FVI), purchases land and a warehouse for $490,000. In addition to the purchase price, FVI makes the following expenditures related to the acquisition: broker’s commission, $29,000; title insurance, $1,900; and miscellaneous closing costs, $6,000. The warehouse is immediately demolished at a cost of $29,000 in anticipation of building a new warehouse. Determine the amount FVI should record as the cost of the land.
Majestic LLC purchased a factory for lump-sum of RO800,000 paid via bank. The fair value of each of the component of the purchase is given below: Land 85000 Building 155000 Equipment 460000 Calculate the amount at which each of the above components shall be recognized on purchase date and write the journal entry for recording purchase transaction.
Soccer Wholesale purchased land and a warehouse for one price of $850,000. In addition to the purchase price, Soccer Wholesale makes the following expenditures related to the acquisition: broker's commission, $44,400; title insurance, $2,800; and miscellaneous closing costs, $7,300. The warehouse is immediately demolished at a cost of $83,900 in anticipation of building a new warehouse. Determine the amount Soccer Wholesale should record as the cost of the land. Cost of the land
Fresh Veggies, Incorporated (FVI), purchases land and a warehouse for $490,000. In addition to the purchase price, FVI makes the following expenditures related to the acquisition: broker's commission, $29,000; title insurance, $1,900; and miscellaneous closing costs, $6,000. The warehouse is immediately demolished at a cost of $29,000 in anticipation of building a new warehouse. Determine the cost of the land and record the purchase (assuming cash was paid for all expenditures). (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the purchase of the land. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general Journal
1. Cala Manufacturing purchases a large lot onwhich an old building is located as part of its plans to build a new plant.The negotiated purchase price is $269,000 for the lot plus $164,000 for theold building. The company pays $26,200 to tear down the old building and$38,730 to fill and level the lot. It also pays a total of $1,545,568 inconstruction costsâ€”this amount consists of $1,453,800 for the new buildingand $91,768 for lighting and paving a parking area next to the building. Prepare a single journal entry to recordthese costs incurred by Cala, all of which are paid in cash. Liltua Company pays$385,000 for real estate plus $20,405 in closing costs. The real estateconsists of land appraised at $214,200; land improvements appraised at$102,000; and a building appraised at $193,800. 2.Allocate the totalcost among the three purchased assets.(Round your “Apportioned Cost” answers to 2decimal places.) rev:11_26_2013_QC_41255 3.Prepare the journal entry to record the purchase.(Round…
Greer Manufacturing purchases property that includes land, buildings and equipment for $4,600,000. In addition, the company pays $171,000 in legal fees, $219,000 in commissions, and $100,000 in appraisal fees. The land is estimated at 27%, the buildings are at 37%, and the equipment at 36% of the property value. Required: Determine the total acquisition cost of this "basket purchase". Allocate the total acquisition cost to the individual assets acquired. Prepare the journal entry to record the purchase assuming that the company paid 55% of the amounts using cash and signed a note (due in five years) for the remainder.
Greer Manufacturing purchases property that includes land, buildings and equipment for $5.3 million. The company pays $183,000 in legal fees, $215,000 in commissions, and $117,000 in appraisal fees. The land is estimated at 28%, the buildings are at 40%, and the equipment at 32% of the property value.Required: Determine the total acquisition cost of this "basket purchase". Allocate the total acquisition cost to the individual assets acquired. Prepare the journal entry to record the purchase assuming that the company paid 40% of the amounts using cash and signed a note (due in five years) for the remainder.
Greer Manufacturing purchases property that includes land, buildings and equipment for $5,000,000. In addition, the company pays $180,000 in legal fees, $214,000 in commissions, and $119,000 in appraisal fees. The land is estimated at 27%, the buildings are at 43%, and the equipment at 30% of the property value. Required: a. Determine the total acquisition cost of this "basket purchase". b. Allocate the total acquisition cost to the individual assets acquired. c. Prepare the journal entry to record the purchase assuming that the company paid 45% of the amounts using cash and signed a note (due in five years) for the remainder. Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the total acquisition cost of this "basket purchase". Acquisition cost toevind A Next >