Exercise 10–32
Requirement 1
2018:
………………………………………………………………………..Cash
2019:
………………………………………………………………………..Cash
Requirement 2
(1) Percentage-of-revenue method:
(2) Straight-line method:
The percentage-of-revenue method is used since it produces the greater amortization,
$80,000.
Exercise 10–33
Organization cost expense ($12,000 + 3,000)……………….. 15,000
……………………………………………………………………..Cash
Exercise 10–34
Requirement 1
……………………………………………………………………..Cash
Requirement 2
……………………………………………………………………..Cash
Problem 10–1
1. To record the acquisition of land and building.
……………………………………………………………………..Cash
PROBLEMS
Asset Fair Value
Percent of Total
Fair Value
Initial
Valuation
(Percent ×
$100,000)
2. To record the acquisition of equipment for cash and a note.
………………………………………..Note payable (face amount)
Present value of note payments:
3. To record the acquisition of a truck by donation.
…………………………………….Revenue—donation of asset
Problem 10–1 (concluded)
4. To capitalize organization costs.
……………………………………………………………………..Cash
5. To record the purchase of equipment.
……………………………………………………………………..Cash
6. To record the acquisition of office equipment by the issuance of common
stock.
……………………………………………………….Common stock
7. To record the acquisition of land in exchange for cash and a note.
……………………………………………………………………..Cash
………………………………………………………….Note payable
Problem 10–2
Requirement 1
BLACKSTONE CORPORATION
Land Account (Site Number 11)
As of September 30, 2019
Acquisition cost $600,000
Real estate broker’s commission 36,000
Requirement 2
BLACKSTONE CORPORATION
Capitalized Cost of Office Building
As of September 30, 2019
Contract cost $3,000,000
Plans, specifications, and blueprints 12,000
Problem 10–3
PELL CORPORATION
Analysis of Changes in Plant Assets
For the Year Ended December 31, 2018
Balance Balance
12/31/2017 Increase Decrease 12/31/2018
Land $ 350,000 $438,000 [1] $ 788,000
Land improvements 180,000 180,000
Building 1,500,000 17,000
Explanation of Amounts:
[1] Cost of land acquired 11/1/2018:
Pell stock exchanged (10,000 shares × $38) $380,000
[2] Cost of machinery and equipment purchased 1/2/2018:
[3] Cost recorded for small storage building 12/31/2018:
Problem 10–4
To reclassify various expenditures incorrectly charged to the intangible asset
account.
Organization cost expense………………………………………. 7,000
Prepaid insurance…………………………………………………… 6,000
Copyright……………………………………………………………… 20,000
Problem 10–5
1. To expense R&D costs.
……………………………………………………………………..Cash
2. To expense legal fees for unsuccessful defense of patent.
……………………………………………………………………..Cash
3. To capitalize the cost of equipment.
……………………………………………………Cash (amount paid)
………………………………………..Note payable (face amount)
4. To capitalize cost of the sprinkler system.
……………………………………………………………………..Cash
5. To capitalize legal fees for successful defense of patent.
……………………………………………………………………..Cash
Problem 10–5 (concluded)
6. To record the trade-in of an old machine for a new machine.
Machine—new ($2,000* + 8,000)……………………………….. 10,000
……………………………………………………………………..Cash
………………………………………………………..Machine—old
*Fair value of old machine (Fair value of new machine – Cash given):
Problem 10–6
Southern Company:
Cash…………………………………………………………………….. 140,000
Eastern Company:
The fair value of Eastern’s building is $1,260,000 ($1,400,000 fair value of
Southern’s building less $140,000 cash given).
Accumulated depreciation—building (account balance)…. 650,000
……………………………………………………………………..Cash
Problem 10–7
Robers:
Cash…………………………………………………………………….. 5,000
Phifer:
New equipment ($70,000 + 5,000)………………………………. 75,000