Assume that a drilling machine is acquired for the following consideration:cash: $200,000shares: 20,000 shares with a market value of $4.50 eachMachine: Cost $100,000, accumulated depreciation, $75,000, fair value $37,000 The buying company also agrees to assume the liability of the selling company’s accounts payable of $25 000 as part of the drilling machine acquisition. Required: Calculate the acquisition cost of the drilling machine

Fixed assets means the assets which is used for many years in business and depreciated over the…

Answered: ssume that a drilling machine is…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 5QE

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Assume that a drilling machine is acquired for the following consideration:

cash: $200,000
shares: 20,000 shares with a market value of $4.50 each
Machine: Cost $100,000, accumulated depreciation, $75,000, fair value $37,000

The buying company also agrees to assume the liability of the selling company’s accounts payable of $25 000 as part of the drilling machine acquisition.

Required: Calculate the acquisition cost of the drilling machine

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