Plant acquisitions for selected companies are as follows. 1. Cullumber Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $714,000. At the time of purchase, Torres's assets had the following book and appraisal values. Book Values Appraisal Values Land $204,000 $153,000 Buildings 255,000 357,000 Equipment 306,000 306,000 To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. Land 153,000 Buildings 255,000 Equipment 306,000 Cash 714,000

Question

Business

Dominic Fox

15 October, 14:46

Plant acquisitions for selected companies are as follows. 1. Cullumber Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $714,000. At the time of purchase, Torres's assets had the following book and appraisal values. Book Values Appraisal Values Land $204,000 $153,000 Buildings 255,000 357,000 Equipment 306,000 306,000 To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made. Land 153,000 Buildings 255,000 Equipment 306,000 Cash 714,000

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Answers (1)

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Aaron Allen · Answer 1

We have to prepare the entry that should have been made at the date of each acquisition.

Explanation:

The journal entry is:

Account Debit Credit

Land $153,000

Building $255,000

Equipment $306,000

Cash $714,000

Land, Building, and Equipment are assets, when assets are acquired or increased, they are debited.

Cash in as an asset too, and when assets decrease they are credited.