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Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance$16,000 Legal fees for drawing the contract 5,000 Pro-rated property taxes for the period after acquisition 36,000 State transfer fees 4,000. An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3 and$1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and$40,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Repeat requirement 1, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for$6,000. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.
Anita Kroll and Aaron Rogers form a partnership on January 1. Kroll’s initial net investment is $60,000, consisting of cash ($14,000), equipment ($66,000), and a note payable reflecting a bank loan for the new business ($20,000). Rogers’s initial investment is cash of $25,000. These amounts are the values agreed on by both partners. Prepare journal entries to record (1) Kroll’s investment and (2) Rogers’s investment.