Blossom Company purchased land, a building, and equipment on January 2, 2017, for $910,000. The company...

Blossom Company purchased land, a building, and equipment on January 2, 2017, for $910,000. The company paid $175,000 cash and signed a mortgage note payable for the remainder. Management's best estimate of the value of the land was $385,000; of the building, $425,000; and of the equipment, $130,000. Record the purchase. (Use Mortgage Payable for account.) (Credit account titles are automatically indented when the 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. Round answers to 0 decimal places, e.g. 5,275.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 2	Land
	Building
	Equipment
	Cash		175,000
	Mortgage Payable

Solutions

Expert Solution

Solution

Date	Account Titles and Explanation	Debit	Credit
2-Jan	Land	$ 372,713
	Building	$ 411,436
	Equipment	$ 125,851
	Cash		$ 175,000
	Mortgage Payable		$ 735,000
	(lumpsum asset purchased)

Working

	Land	Building	Equipment	Total
Appraisal Value	$ 385,000	$ 425,000	$ 130,000	$ 940,000
Value of cash paid and notes payable accepted				$ 910,000
Allocation of lumpsum amount in ratio of Market value	$ 372,713	$ 411,436	$ 125,851	$ 910,000

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

1. On January 2, 2020, Murphy Company purchased land that cost $410,000, a building on the...

1. On January 2, 2020, Murphy Company purchased land that cost $410,000, a building on the land that cost $1,450,000, and equipment that cost $70,000. The building has an estimated useful life of 29 years. The equipment has an estimated useful life of 7 years. Required: Prepare the property, plant, and equipment section of the balance sheet as of December 31, 2020. Note: Use straight-line depreciation with no salvage value. Murphy Company Balance Sheet (partial) December 31 Property, Plant, and...

Blossom Company uses special strapping equipment in its packaging business. The equipment was purchased in January...

Blossom Company uses special strapping equipment in its packaging business. The equipment was purchased in January 2019 for $6,000,000 and had an estimated useful life of 8 years with no salvage value. At December 31, 2020, new technology was introduced that would accelerate the obsolescence of Blossom's equipment. Blossom's controller estimates that expected future net cash flows on the equipment will be $3,750,000 and that the fair value of the equipment is $3,300,000. Blossom intends to continue using the equipment,...

in its first year of business, atc company purchased land, a building, and a equipment on...

in its first year of business, atc company purchased land, a building, and a equipment on november 20 2016 for november 700000 in total. The land was valued 338000 and building at 262000 and the equipment at 150000. Additional information on the depreicable asset follows: Assest Residual Value Useful life in years Depriciation Method Building 15,000 60months residual value Straight line Equipment 15,000 8months residual value Double diminishing balance Instructions: a. Allocate the purchase cost of the land, building and...

6. On January 1, 2019, Ginger Company purchased land and a building for a total cash...

6. On January 1, 2019, Ginger Company purchased land and a building for a total cash price of $6,900,000. Individually, the land was appraised at $2,250,000 and the building at $5,250,000. The buildings estimated useful life is 25 years and its estimated salvage value is $300,000. Required: a. Prepare the journal entry to record the purchase of land and building on January 1, 2019. b. What is the 2019 depreciation expense on the building, assuming that double declining-balance depreciation is...

On January 1, 2018, Blossom Ltd. purchased equipment for $808,000. The equipment was assumed to have...

On January 1, 2018, Blossom Ltd. purchased equipment for $808,000. The equipment was assumed to have an 8-year useful life and no residual value, and was to be depreciated using the straight-line method. On January 1, 2020, Blossom's management became concerned that the equipment may have become obsolete. Management calculated that the undiscounted future net cash flows from the equipment was $580,750, the discounted future net cash flows was $515,100, and the current fair value of the equipment (after costs...

On 1st January, 2016, a building materials manufacturing company in Oman purchased a farm land from...

On 1st January, 2016, a building materials manufacturing company in Oman purchased a farm land from the outskirts of Al Dhakliyah region. The cost of the property was OMR 675,000 and the company has made the settlement in full. The property tax of OMR 36,000 was due from the previous owner of the farm was paid by the company. All the legal costs relating to the acquisition of land was OMR 5,400. The old building in the farm land was...

On January 8 of year 1 Javier purchased a building, including the land it was on,...

On January 8 of year 1 Javier purchased a building, including the land it was on, to assemble his new equipment. The total cost of the purchase was $1,399,500; $322,000 was allocated to the basis of the land and the remaining $1,077,500 was allocated to the basis of the building. (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) d. Answer the...

On January 1, 2016, Phillips Company made a basket purchase including land, a building and equipment...

On January 1, 2016, Phillips Company made a basket purchase including land, a building and equipment for $830,000. The appraised values of the assets are $54,000 for the land, $820,000 for the building and $136,000 for equipment. Phillips uses the double declining balance method of depreciation for the equipment which is estimated to have a useful life of four years and a salvage value of $10,000. The depreciation expense for 2016 for the equipment is $68,000. $34,000. $27,950. $55,901.

On January 1, 2018, XYZ Company paid $380,000 to purchase land, building, and equipment. The market...

On January 1, 2018, XYZ Company paid $380,000 to purchase land, building, and equipment. The market values of these assets on that date were: land $60,000; building $200,000; equipment $140,000. Before the property could be used, XYZ Company had to spend $5,000 to put the equipment in working order. The building was assigned a useful life of 20 years with a $4,000 salvage value. The building will be depreciated using the straight-line method. On October 1, 2028, XYZ Company sold...

Entity A purchased a property (Land and Building) for $5,000,000 on 1 July 2017. Entity A...

Entity A purchased a property (Land and Building) for $5,000,000 on 1 July 2017. Entity A paid 60% by a cheque on 1 July 2017 and the balance was settled on 1 August 2017 through a bank transfer. The value of the land was $500,000 and the buildings $4,500,000. The expected useful life of the building is 50 years without any residual value. On 30 June 2019, the property was revalued to $7,562,208 (land $980,208 and buildings $6,582,000). On 30...

Subjects