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Acquisition Cost The following transactions of Weber Company occurred during 2019: 1. The company acquired a tract of land in exchange for 1,000 shares of $10 par value common stock. The stock was traded on the New York Stock Exchange at $24 on the date of exchange. The land had a book value on the selling company’s records of $5,000, and it was believed to be worth “anything up to $30,000.” 2. An engine on a truck was replaced. The truck originally cost $10,000 3 years ago and was being depreciated at $2,000 per year. The engine cost $1,000 to replace. 3. The company acquired a tract of land that was believed to have mineral deposits by issuing 500 shares of preferred stock of $50 par value. The preferred stock was rarely traded. The last transaction was 2 months earlier, when 50 shares were sold at $75 per share. The owner of the land was willing to accept cash of $55,000, and an appraisal had shown a value of $60,000. 4. The company purchased a machine with a list price of $8,500 by issuing a 2-year, $10,000 non-interest-bearing note when the market rate of interest was 10%. Required: Prepare journal entries to record the preceding events.

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281
BuyFind

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
Publisher: Cengage Learning
ISBN: 9781337788281

Solutions

Chapter
Section
Chapter 10, Problem 3P
Textbook Problem

Acquisition Cost The following transactions of Weber Company occurred during 2019:

  1. 1. The company acquired a tract of land in exchange for 1,000 shares of $10 par value common stock. The stock was traded on the New York Stock Exchange at $24 on the date of exchange. The land had a book value on the selling company’s records of $5,000, and it was believed to be worth “anything up to $30,000.”
  2. 2. An engine on a truck was replaced. The truck originally cost $10,000 3 years ago and was being depreciated at $2,000 per year. The engine cost $1,000 to replace.
  3. 3. The company acquired a tract of land that was believed to have mineral deposits by issuing 500 shares of preferred stock of $50 par value. The preferred stock was rarely traded. The last transaction was 2 months earlier, when 50 shares were sold at $75 per share. The owner of the land was willing to accept cash of $55,000, and an appraisal had shown a value of $60,000.
  4. 4. The company purchased a machine with a list price of $8,500 by issuing a 2-year, $10,000 non-interest-bearing note when the market rate of interest was 10%.

Required:

Prepare journal entries to record the preceding events.

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Chapter 10 Solutions

Intermediate Accounting: Reporting And Analysis
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