Information for Craig Ltd. follows:
1. On July 6, Craig acquired the plant assets of Des bury Company, which had discontinued operations. The property was appraised by a reliable, independent valuator on the date of acquisition as follows:
Land ................ $550,000
Building-structure .......... 1,500,000
Building-HVAC .......... 175,000
Machinery ............. 725,000
Total ............... $2,950,000
Craig gave 18,000 of its no par value common shares in exchange. The most recent sale of Craig's common shares took place last month, when 5,000 shares were sold for $180 per share.
2. Craig had the following cash expenses between July 6 and December 15, the date when it first occupied the building:
Repairs to building ................... $98,000
Construction of bases for machinery to be installed later .... 110,000
Driveways and parking lots ................ 131,000
Remodel ling of office space in building,
including new partitions and walls ............. 59,000
Special assessment by city on land ............ 16,000
On December 20, Craig purchased machinery for $305,000, subject to a 2% cash discount, and paid freight on the machinery of $14,000. The machine was dropped while being placed in position, which resulted in paying the supplier for repairs costing $12,500. The company paid the supplier within the discount period, and records purchases of machinery using the net method.
Instructions
(a) Prepare the entries for these transactions on the books of Craig Ltd. Craig prepares financial statements in accordance with IFRS.
(b) Would the journal entries for item 1 provided in part (a) differ if Craig prepares financial statements in accordance with ASPE?
(c) Prepare the entry for the purchase and payment of the machinery in item 2, assuming the discount was not taken.