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Short Problems Involving Plant Assets

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For your convenience, I have attached a formatted MS Excell spreadsheet containing your original post as well as the corrected entries.

Instructions: Complete the requirements specified for each of the following independent situations.

A. Maddox Company purchased land and a modern office building on March 1 for a combined cash price of $800,000. The land had a cost of $470,000 and the building had a book value of $100,000 on the seller's books. The land and building had fair market values of $520,000 and $280,000, respectively on March 1. Maddox made the following entry at acquisition:

Land 470,000
Building 500,000
Gain on Purchase 70,000
Accumulated Depreciation 100,000
Cash 800,000

Prepare the correct entry for the acquisition.

Corrected Entry:
Land (FMV) 520,000
Building (FMV) 280,000
Cash 800,000
(Entry for the purchase of land and building)

The purchase cost of $470,000 and the book value of $100,000 on the seller's books has nothing to do with the entry to Maddox's journals. Maddox would be required to make entries for the cash that was paid for the land and building, as well as ...

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Short Problems Involving Plant Assets