Question
In: Accounting
Bob the Builder purchased a land and building in Year 6 for $4,000,000. $1.6 million of...
Bob the Builder purchased a land and building in Year 6 for $4,000,000. $1.6 million of the purchase price was allocated to the land, and the balance to the building. At the time of the purchase it was estimated that the building would have a useful life of 40 years but no residual value. In Year 18, Bob exchanged the land and building for a piece of undeveloped land. The fair market value of the assets given up was estimated to be $6.2 million and the fair value of the land to be received was $6.1 million. To make up the difference in the fair values of the assets exchanged, Bob also received $100,000 cash Bob depreciates his buildings using the straight-line method. Bob adopts half-year convention for depreciation.
(1) Prepare the journal entry to record the exchange of the asset in Year 18, for Bob the Builder, assuming that the transaction has commercial substance (general case).
(2) Prepare the journal entry to record the exchange of the asset in Year 18, for Bob the Builder, assuming that the transaction lacks commercial substance (exception case).
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Bob the Builder purchased a land and building in Year 6 for $4,000,000. $1.6 million of...
Bob the Builder purchased a land and building in Year 6 for
$4,000,000. $1.6 million of the purchase price was allocated to the
land, and the balance to the building. At the time of the purchase
it was estimated that the building would have a useful life of 40
years but no residual value.
In Year 18, Bob exchanged the land and building for a piece of
undeveloped land. The fair market value of the assets given up was
estimated...
Scoop is a main "crew" in Bob the Builder and it was purchased on January 1,...
Scoop is a main "crew" in Bob the Builder and it was purchased
on January 1, Year 10 for $100,000. [Please use "equipment" account
for "Scoop" in your journal entry.] Bob has been depreciating Scoop
on a straight-line basis over a 25-year period with zero residual
value. The appraisal carried out on December, Year 14 determined
that the fair value of scoop was $76，000 and the appraisal carried
out on December, Year 19 determined that the fair value of scoop...
On November 1, Year 6, Bob the Builder purchases a cookie after having a dream in...
On November 1, Year 6, Bob the Builder purchases a cookie after
having a dream in which a stranger gave him a giant fortune cookie.
A week later, he finds out that he won $100,000. On December 1,
Year 6, he cashes in his lottery ticket and forms a corporation
called Fortune Cookie Inc. (FCI) with his lottery money. When FCI
is formed, there is no other assets or liabilities. From the
formation of FCI to the end of Year...
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $4
million. In addition to the purchase price, Samtech made the
following expenditures in connection with the purchase of the land
and building:
Title
insurance
$
21,000
Legal fees for
drawing the contract
7,500
Pro-rated
property taxes for the period after acquisition
41,000
State transfer
fees
4,500
An independent appraisal estimated the fair values of the land and
building, if purchased separately, at $3.9 and $1.1 million,
respectively. Shortly after acquisition, Samtech spent...
samtech manufacturing purchased land and building for 3 million. In addition to the purchase price samtec...
samtech manufacturing purchased land and building for
3 million. In addition to the purchase price samtec made the
following expenditures in connection with the purchase of the land
and building. Title Insurance 30,000. Legal fees for drawing the
contract 7000. Prorated property taxes for the. After acquisition
50,000. State transfer fees 5400. An independent appraisal
estimated the fair values of the land and building if purchased
separately at 3 and 1 million respectively shortly after
acquisition samtec spent 96,000 to...
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $3
million. In addition to the purchase price, Samtech made the
following expenditures in connection with the purchase of the land
and building:
Title insurance
$
17,000
Legal fees for drawing the
contract
5,500
Pro-rated property taxes for the
period after acquisition
37,000
State transfer fees
4,100
An independent appraisal estimated the fair values of the land and
building, if purchased separately, at $3 and $1 million,
respectively. Shortly after acquisition, Samtech spent...
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $4
million. In addition to the purchase price, Samtech made the
following expenditures in connection with the purchase of the land
and building:
Title insurance
$
19,000
Legal fees for drawing the contract
6,500
Pro-rated property taxes for the period after acquisition
39,000
State transfer fees
4,300
An independent appraisal estimated the fair values of the land and
building, if purchased separately, at $3.7 and $1.3 million,
respectively. Shortly after acquisition, Samtech spent...
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $4
million. In addition to the purchase price, Samtech made the
following expenditures in connection with the purchase of the land
and building:
Title insurance
$
33,000
Legal fees for drawing the contract
8,500
Pro-rated property taxes for the period after acquisition
53,000
State transfer fees
5,700
An independent appraisal estimated the fair values of the land and
building, if purchased separately, at $3 and $2 million,
respectively. Shortly after acquisition, Samtech spent...
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $4
million. In addition to the purchase price, Samtech made the
following expenditures in connection with the purchase of the land
and building:
Title insurance
$
16,000
Legal fees for drawing the contract
5,000
Pro-rated property taxes for the period after acquisition
36,000
State transfer fees
4,000
An independent appraisal estimated the fair values of the land and
building, if purchased separately, at $3.3 and $1.1 million,
respectively. Shortly after acquisition, Samtech spent...
Semtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Semtech...
Semtech Manufacturing purchased land and building for $4
million. In addition to the purchase price, Semtech made the
following expenditures in connection with the purchase of the land
and building: Title insurance $ 25,000 Legal fees for drawing the
contract 9,500 Pro-rated property taxes for the period after
acquisition 45,000 State transfer fees 4,900 An independent
appraisal estimated the fair values of the land and building, if
purchased separately, at $3 and $2 million, respectively. Shortly
after acquisition, Semtech spent...
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