Two independent companies, Mitz Co and Pine Co, are in the home building business. Eachowns a tract of land held for development, but each would prefer to build on the other's land.They agree to exchange their land. An appraiser was hired, and from her report and thecompanies records, the following information was obtained:Mintz's LandCost and Book Value: $192,000Fair value based upon appraisal: $240,000Pine's LandCost and Book Value: $120,000Fair value based upon appraisal: $210,000The exchange was made, and based on the difference in appraised fair values, Pine paid$30,000 to Mintz. The exchange lacked commercial substance.Use commas but do not use $ signs or cents.1. For financial reporting purposes. Mintz should recognize a pre-tax gain on this exchange of How much should the new land be recorded on Mintz's books at?D Question 14How much should the new land be recorded on Pine's books at?

The book value of the land for Mintz is $192,000 and for Pine is $120,000. This is the value at…

Answered: Two independent companies, Mitz Co and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Two independent companies, Ball and Brown, are in the home building business. Each owns a tract of land for development, b ut each company would prefer to build on the other's land. Accordingly, the agree to exchange their land. An appraiser was hir ed, and from the report and the companies records, the following information was obtained: Ball Co.'s Land Brown Co.'s Land Cost (same as book value) 800,000 500,000 Market value, per appraisal 1,000,000 900,000 The exchange of land was made and based on the difference in appraised values, Brown paid P100,000 cash to Ball. After the exchange, Ball would record its newly acquired land at: O P920,000 O Answer not given O P700,000 O P800.000
The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. According to an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete the transaction.Required:1. What is the fair value of the new parcel of land received by Tinsley?2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance.3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance.4. Prepare the journal entry to record the exchange except that Tinsley received $9,000 in the exchange, and the exchange lacks commercial substance.
The Tinsley Company exchanged land that it had been holding for future plant expansion for a more suitable parcel located farther from residential areas. Tinsley carried the land at its original cost of $30,000. According to an independent appraisal, the land currently is worth $72,000. Tinsley paid $14,000 in cash to complete the transaction. Required: 1. What is the fair value of the new parcel of land received by Tinsley? 2. Prepare the journal entry to record the exchange assuming the exchange has commercial substance. 3. Prepare the journal entry to record the exchange assuming the exchange lacks commercial substance.
Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,710,000. Harding paid $455,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $481,000; Building, $1,430,000 and Equipment, $949,000. What journal entry would be used to record the purchase of the above assets? (Do not round intermediate calculations.)
Renata purchases a building and land for a lump sum price of $1,000,000. Renata hires an appraiser that determines a fair market value for the land $325,000 and the fair market value of the building is $725,000. What is Renata's basis in the land and the building? OLand $300,000 and building $700,000 OLand $310,000 and building $690,000. OLand $325,000 and building $725,000 OLand $325,000 and building $$675,000
Westwood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: Lot Appraised Value Lot 1 $132,000 Lot 2 110,000 Lot 3 198,000 Westwood paid $355,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decimals to two places, and use the computed percentages throughout. (Record a single compound journal entry. Record debits first, then credits. Select the explanation on the last line of the journal entry table. Check your spelling carefully and do not abbreviate.)
Cornett Company, a tennis racket manufacturing company, was given $600,000 worth of property from an independent developer as an incentive to build a factory there. Required: Prepare the journal entry for Cornett to record the receipt of the land.
Maplewood Properties bought three lots in a subdivision for a lump-sum price. An independent appraiser valued the lots as follows: Lot Appraised Value 1 $144,000 2 96,000 3 240,000 Maplewood paid $355,000 in cash. Record the purchase in the journal, identifying each lot's cost in a separate Land account. Round decimals to two places, and use the computed percentages throughout. (Record a single compound journal entry. Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Credit
Red Rock Bakery purchases land, building, and equipment for a single purchase price of $300,000. However, the estimated fair values of the land, building, and equipment are $100,000, $260,000, and $40,000, respectively, for a total estimated fair value of $400,000. Required: Determine the amounts Red Rock should record in the separate accounts for the land, the building, and the equipment.
White purchased land with a current market value of $144,000, a building with a market value of $18,000, and equipment with a market value of $18,000. Journalize the lump-sum purchase of the three assets purchased for a total cost of $170,000 in exchange for a note payable. (Record debits first, then credits. Exclude explanations from any journal entries.) Journal Entry Date Accounts Debit Credit Land Building Equipment Notes payable
Carver Inc. purchased a building and the land on which the building is situated for a total cost of $922,800 cash. The land was appraised at $244,081 and the building at $817,139. What is the accounting term for this type of acquisition? Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building. Would the company recognize a gain on the purchase? Record the purchase in a horizontal statements model.
Fresh Veggies, Incorporated (FVI), purchases land and a warehouse for $490,000. In addition to the purchase price, FVI makes the following expenditures related to the acquisition: broker's commission, $29,000; title insurance, $1,900; and miscellaneous closing costs, $6,000. The warehouse is immediately demolished at a cost of $29,000 in anticipation of building a new warehouse. Determine the cost of the land and record the purchase (assuming cash was paid for all expenditures). (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list Journal entry worksheet Record the purchase of the land. Note: Enter debits before credits. Transaction 1 Record entry General Journal Clear entry Debit Credit View general Journal

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