Allocation of Package Purchase PriceTamock Company purchased a plant from one of its suppliers. The $950,000purchase price included the land, a building, and factory machinery. Tamockalso paid $6,000 in legal fees to negotiate the purchase of the plant. Arnappraisal showed the following values for the items purchased:Assessed ValuePropertyLandBuildingMachinery318,000$126,000456,000TotalF$900,000Using the assessed value as a guide, allocate the total purchase price of theplant to the land, building, and machinery accounts in Tamock Company'srecords.Do not round until your final answers. Round answers to the nearest dollar.

Calculate total purchase price of an asset:Total purchase price of an asset = Purchase price +…

Answered: Allocation of Package Purchase Price…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter5: Business Deductions

Section: Chapter Questions

Problem 49P

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Allocation of Package Purchase Price Tamock Company purchased a plant from one of its suppliers. The $965,000 purchase price included the land, a building, and factory machinery. Tamock also paid $5,000 in legal fees to negotiate the purchase of the plant. An appraisal showed the following values for the items purchased: Property Assessed Value Land $126,000 Building 486,000 Machinery 288,000 Total $900,000 Using the assessed value as a guide, allocate the total purchase price of the plant to the land, building, and machinery accounts in Tamock Company’s records. Asset Allocation ofPurchase Price Land Answer Building Answer Machinery Answer Total Answer
Allocation of Package Purchase Price Tamarack Company purchased a plant from one of its suppliers. The $1,000,000 purchase price included the land, a building, and factory machinery. Tamarack also paid $6,000 in legal fees to negotiate the purchase of the plant. An appraisal showed the following values for the items purchased: Property Assessed Value Land $126,000 Building 456,000 Machinery 318,000 Total $900,000 Using the assessed value as a guide, allocate the total purchase price of the plant to the land, building, and machinery accounts in Tamarack Company’s records. Do not round until your final answers. Round answers to the nearest dollar. Asset Allocation ofPurchase Price Land Answer Building Answer Mark 0.00 out of 1.00 Machinery Answer Total Answer
Allocation of Package Purchase Price and Depreciation Methods In an expansion move, Beam Company paid $2,480,000 for most of the property, plant, and equipment of a small manufacturing firm that was going out of business. Before agreeing to the price, Beam hired a consultant for $20,000 to appraise the assets. The appraised values were as follows: Land $432,000 Building 1,026,000 Equipment 1,080,000 Trucks 162,000 Total $2,700,000 Beam issued two checks totaling $2,500,000 to acquire the assets and pay the consultant on April 1. Beam depreciated the assets using the straight-line method for the building and equipment, and the double-declining balance method for the trucks. Estimated useful lives and salvage values were as follows: Useful Life SalvageValue Building 15 years $86,000 Equipment 9 years 70,000 Trucks 5 years 13,000
E9-2A Allocation of Package Purchase Price Tamock Company purchased a plant from one of its suppliers. The $950,000 purchase price included the land, a building, and a factory machinery. Tamock also paid $6,000 in legal fees to negotiate the purchase of the plant. An appraisal showed the following values for the items purchased: Property Assessed Value Land $126,000 Building $456,000 Machinery $318,000 Total $900,000 Using the assessed value as a guide,…
Allocation of Package Purchase Price and Depreciation Methods To expand its business, Small Company paid $954,000 for most of the property, plant, and equipment of a small trucking company that was going out of business. Before agreeing to the price, Small hired a consultant for $6,000 to appraise the assets. The appraised values were as follows: Property AssessedValue Land $150,000 Building 550,000 Trucks 180,000 Equipment 120,000 Total $1,000,000 Small issued two checks totaling $960,000 to acquire the assets and pay the consultant on July 1. Small depreciated the assets using the straight-line method on the building and on the equipment, and the double-declining balance method on the trucks. Estimated useful lives and salvage values were as follows: Useful Life SalvageValue Building 20 years $42,000 Trucks 4 years 15,000 Equipment 7 years 10,000 a. Calculate the amounts allocated to the various types of plant assets acquired on July 1.…
Allocation of Package Purchase Price and Depreciation Methods To expand its business, Renee Company paid $760,000 for most of the property, plant, and equipment of a small trucking company that was going out of business. Before agreeing to the price, Renee hired a consultant for $10,000 to appraise the assets. The appraised values were as follows: Property Assessed Value Land $120,000 Building 440,000 Trucks 144,000 Equipment 96,000 Total $800,000 Renee issued two checks totaling $770,000 to acquire the assets and pay the consultant on July 1. Renee depreciated the assets using the straight-line method on the building and on the equipment, and the double-declining balance method on the trucks. Estimated useful lives and salvage values were as follows: Useful Life Salvage Value Building 20 years $42,000 Trucks 4 years 15,000 Equipment 8 years 10,000
Allocation of Package Purchase Price Joe Comey went into business by purchasing a car lubrication station consisting of land, a building, and equipment. The seller’s original asking price was $240,000. Comey hired an appraiser for $3,000 to appraise the assets. The appraised valuations were: Property Assessed Value Land $43,000 Building 95,000 Equipment 62,000 Total $200,000 After receiving the appraisal, Comey offered $183,000 for the business. The seller refused this offer. Comey then offered $190,000 for the business, which the seller accepted. Using the appraisal values as a guide, allocate the total purchase price of the car lubrication station to the Land, Building, and Equipment accounts. Asset Allocation ofPurchase Price Land Answer Building Answer Equipment Answer Total Answer
Entity A acquires equipment on January 1, 20x1. Information on costs is as follows: Purchase price, gross of P10,000 trade discount 800,000 Non-refundable purchase taxes 20,000 Delivery and handling costs 40,000 Installation costs 30,000 Present value of decommissioning and restoration costs 10,000 1.) How much is the initial cost of the equipment? A. P 890,000 B. P 820,000 C. P 900,000 D. P 870,000
Making a lump-sum asset purchase Concord Pet Care Clinic paid $210,000 for a group purchase of land, building, and equipment. At the time of the acquisition, the land had a market value of $110,000, the building $88,000, and the equipment $22,000. Journalize the lump-sum purchase of the three assets for a total cost of $210,000, the amount for which the business signed a note payable.
Basket Purchase of Intangible Assets Taraz Company paid $500,000 to purchase the following portfolio of intangibles with estimated fair values as indicated: Estimated Fair Value Internet domain name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $150,000 Order backlog. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 In-process research and development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Operating permit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 In addition, Taraz spent $300,000 to run an advertising campaign to boost its image in the local community. Make the journal entries necessary to record the purchase of the intangibles and the payment for the…
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtechmade the following expenditures in connection with the purchase of the land and building:Title insurance $16,000Legal fees for drawing the contract 5,000Pro-rated property taxes for the period after acquisition 36,000State transfer fees 4,000An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3and $1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and$40,000 for landscaping.Required:1. Determine the initial valuation of each asset Samtech acquired in these transactions.2. Repeat requirement 1, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent$86,000 clearing and grading the land in preparation for the construction of a new building.
Ebasan Compary acquired a new machine with an invoice cost of P1,600,000, Ebasan incurred transportation cost P50,000 and installation cost P140,000. The terms of the acquisition include a 5% discount if payment is made in 10 days. The entity paid beyond the discount period. The entity's chief engineer with monthly salary of P60,000 spent two-thirds of his time during trial run of the new machine. The entity requested an allowance from the supplier because the machine proved to be of less than standard performance capability. The supplier granted a cash allowance of P100,000. The cost of removing on aid machine before the new machine was installed amounted to P10,000. The operator of the old machine who was laid off due to the acquisition of the new machine was paid a gratuity of P30,000. What amount should Ebasan record as cost of the new machine?

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