Perlman Land Development, Inc. purchased land for$70,000 and spent $30,000 developing it. It then sold theland for $160,000. Sheehan Manufacturing purchased land for a future plant site for $100,000. Due to a changein plans, Sheehan later sold the land for $160,000. Shouldthese two companies report the land sales, both at gainsof $60,000, in a similar manner?
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Perlman Land Development, Inc. purchased land for
$70,000 and spent $30,000 developing it. It then sold the
land for $160,000. Sheehan Manufacturing purchased land for a future plant site for $100,000. Due to a change
in plans, Sheehan later sold the land for $160,000. Should
these two companies report the land sales, both at gains
of $60,000, in a similar manner?
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- Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $220,000. The Focus Company initially offered to buy the land for $177,000. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $232,000. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company?Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $95,239. The Focus Company initially offered to buy the land for $108,852. The companies settled on a purchase price of $212,000. On the same day, another piece of land on the same block sold for $102,714. Under the cost principle, at what amount should the land be recorded in the accounting records of Focus Company? a.$102,714 b.$95,239 c.$212,000 d.$108,852Donner Company is selling a piece of land adjacent to its business premises. An appraisal reported the market value of the land to be $219,879. The Focus Company initially offered to buy the land for $177,067. The companies settled on a purchase price of $209,440. On the same day, another piece of land on the same block sold for $233,966. Under the cost concept, at what amount should the land be recorded in the accounting records of Focus Company? Oa. $211,966 Ob. $177,067 Oc. $209,440 Od. $219,879
- The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. According to an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley? 2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance. 3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance.Two independent companies, Ball and Brown, are in the home building business. Each owns a tract of land for development, b ut each company would prefer to build on the other's land. Accordingly, the agree to exchange their land. An appraiser was hir ed, and from the report and the companies records, the following information was obtained: Ball Co.'s Land Brown Co.'s Land Cost (same as book value) 800,000 500,000 Market value, per appraisal 1,000,000 900,000 The exchange of land was made and based on the difference in appraised values, Brown paid P100,000 cash to Ball. After the exchange, Ball would record its newly acquired land at: O P920,000 O Answer not given O P700,000 O P800.000The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. According to an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete the transaction.Required:1. What is the fair value of the new parcel of land received by Tinsley?2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance.3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance.4. Prepare the journal entry to record the exchange except that Tinsley received $9,000 in the exchange, and the exchange lacks commercial substance.
- Eton Corporation purchased land in 1998 for $190,000. In 2014, it purchased a nearly identical parcel of land for $430,000. In its 2014 balance sheet, Eton valued these two parcels of land at a combined value of $860,000. Reporting the land in this manner violated the: Select one: a. Principle of the business entity. b. Going-concern assumption. c. Cost principle. d. Objectivity principle.The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitableparcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. Accordingto an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete thetransaction.Required:1. What is the fair value of the new parcel of land received by Tinsley?2. Prepare the journal entry to record the exchange assuming the exchange has commercial substanceSalad Express exchanged land it had been holding for future plant expansion for a more suitable parcel of land along distribution routes. Salad Express reported the old land on the previously issued balance sheet at its original cost of $70,000. According to an independent appraisal, the old land currently is worth $132,000. Salad Express paid $19,000 in cash to complete the transaction.Required:1. What is the fair value of the new parcel of land received by Salad Express?2. Record the exchange.
- Salad Express exchanged land it had been holding for future plant expansion for a more suitable parcel of land along distribution routes. Salad Express reported the old land on the previously issued balance sheet at its original cost of $77,000. According to an independent appraisal, the old land currently is worth $146,000. Salad Express paid $22,500 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Salad Express? Fair value of the new landHilo Company has land that cost $350,000 but now has a fair value of $500,000. Hilo Company decides to use the revaluation method specified in IFRS to account for the land. Which of the following statements is correct? a. Hilo Company must continue to report the land at $350,000. b. Hilo Company would report a net income increase of $150,000 due to an increase in the value of the land. c. Hilo Company would debit Revaluation Surplus for $150,000. d. Hilo Company would credit Revaluation Surplus by $150,000.The General Service Contractor Company paid$400,000 for a house and lot. The value of the landwas appraised at $155,000 and the value of the houseat $245,000. The house was then torn down at anadditional cost of $15,000 so that a warehouse couldbe built on the combined lots at a cost of $1,250,000.What is the value of the property with the warehouse?For depreciation purposes, what is the cost basis forthe warehouse?