Lump-Sum Purchases; Issuance of Stock for Plant Assets 10.32 A package consisting of building and land is bought at a lump-sum price of $70,000. The FMV of the building and land is $60,000 and $20,000, respectively. Allocate the cost to each item and prepare a jour- nal entry.

Lump-Sum Purchases; Issuance of Stock for Plant Assets 10.32 A package consisting of building and land is bought at a lump-sum price of $70,000. The FMV of the building and land is $60,000 and $20,000, respectively. Allocate the cost to each item and prepare a jour- nal entry.

Corporate Fin Focused Approach

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ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter2: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 14SP

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Question

10.32 and 10.33 please.

Buildings
10.31 Company X constructs its own building and incurs the following costs: bricks, $40,000; construction
labor, $70,000; heat and power, $20,000; fixed overhead, $4,000.
(a) Determine the cost of this building.
(b) Would your answer to part (a) change if an outside construction company charged $127,000? Why?
Lump-Sum Purchases; Issuance of Stock for Plant Assets
10.32 A package consisting of building and land is bought at a lump-sum price of $70,000. The FMV of the
building and land is $60,000 and $20,000, respectively. Allocate the cost to each item and prepare a jour-
nal entry.
10.33 Company Fissues 80 shares of its $80-par common stock for a machine. Prepare a journal entry for each
of the following independent cases:
(a) The FMV of the machine is $14,000.
(b) The FMV of the stock is $12,000.

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