Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $30,000. Credit terms were 3/10, 1/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2. Connors gave the seller a noninterest-bearing note. The note required payment of $32,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation. 3. Connors traded in old equipment that had a book value of $8,500 (original cost of $19,000 and accumulated depreciation of $10,500) and paid cash of $27,000. The old equipment had a fair value of $4,500 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,500 shares of its no-par common stock in exchange for the equipment. The market value of the common stock was not determinable. The equipment could have been purchased for $30,000 in cash.

Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $30,000. Credit terms were 3/10, 1/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2. Connors gave the seller a noninterest-bearing note. The note required payment of $32,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation. 3. Connors traded in old equipment that had a book value of $8,500 (original cost of $19,000 and accumulated depreciation of $10,500) and paid cash of $27,000. The old equipment had a fair value of $4,500 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,500 shares of its no-par common stock in exchange for the equipment. The market value of the common stock was not determinable. The equipment could have been purchased for $30,000 in cash.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 5PA: Jada Company had the following transactions during the year: Purchased a machine for $500,000 using...

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Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. The equipment was purchased on account for $43,000 Credit terms were 310/, n30/. Payment was made within the discount period and the company records the purchases of equipment net of discounts. Connors gave the seller a noninterest-bearing note. The note required payment of $45,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 12% properly reflects the time value of money in this situation, Connors traded in old equipment that had a book value of $15,000 ( original cost of $32, 000 and accumulated depreciation of $17,000) and paid cash of 540,000. The old equipment had a fair value of $9, 700 on the date of the exchange. The exchange has commercial substance. Connors issued 2, 000 shares of its no-par common stock in exchange for the equipment. The market value of…
Connors Corporation acquired manufacturing equipment for use in its assembly line. Below are four independent situations relating to the acquisition of the equipment. 1. The equipment was purchased on account for $25,000. Credit terms were 2/10, n/30. Payment was made within the discount period and the company records the purchases of equipment net of discounts. 2. Connors gave the seller a noninterest-bearing note. The note required payment of $27,000 one year from date of purchase. The fair value of the equipment is not determinable. An interest rate of 10% properly reflects the time value of money in this situation. 3. Connors traded in old equipment that had a book value of $6,000 (original cost of $14,000 and accumulated depreciation of $8,000) and paid cash of $22,000. The old equipment had a fair value of $2,500 on the date of the exchange. The exchange has commercial substance. 4. Connors issued 1,000 shares of its nopar common stock in exchange for the equipment. The market…
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