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 $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.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...

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Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of $1,200, paid installation fees of $2,750, pays annual maintenance cost of $250, and received a 10% discount on sales price. Determine the acquisition cost of the equipment.
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