On May 1, 2022 Nankai Ltd. purchased a factory, including land, a building, and equipment for...
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On May 1, 2022 Nankai Ltd. purchased a factory, including land, a building, and equipment for $7,200,000. Of this amount, 30% was paid in cash, 70% by signing a 10 year, 3%, note payable. In addition to the purchase cost, Nankai paid 5% of the cost of the factory for the taxes, $60,000 in legal fees, $38,000 for overhauling the equipment, and $168,000 for renovating the building. These costs were paid in cash. The land, building, and equipment were appraised as 30%, 60% and 10% of the purchase price. Required: 1. Apportion the cost of the factory. B A с 1 Asset Items: Apportioned Cost Additional Cost 2 Land 2,268,000 $ 3 Building 4,536,000 $ 756,000 $ 4 Equipment 5 Total 7,560,000 $ $ $ No 1 $ $ 2. Record journal entries for the purchase on May 1. View transaction list View journal entry worksheet D Total Costs $2,328,000 60,000 168,000 $4,704,000 38,000 $ 794,000 266,000 $7,826,000 Date May 01, 2022 General Journal Land Building Equipment Cash Long Term Note Payable Debit 2,328,000 4,704,000 794,000 Credit 2,347,800 5,478,200 Ⓒ innl 3. On December 30, 2022, chemical waste was leaked from the neighboring factory. As a result, the land had a fair value of $1,250,000, and the selling cost of the land would be $50,000. The accountant determined that the value in use was $950,000. Determine if the value of land is impaired. If so, what is the amount of impairment? Carrying Value Value in Use Fair Value Impaired 4. Prepare the journal entry on December 30, 2022 for this particular issue, if any. View transaction list Amount Journal entry worksheet Record the journal entry on December 30, 2022 for the impairment, if any. (If no entry, please choose "No Entry." On May 1, 2022 Nankai Ltd. purchased a factory, including land, a building, and equipment for $7,200,000. Of this amount, 30% was paid in cash, 70% by signing a 10 year, 3%, note payable. In addition to the purchase cost, Nankai paid 5% of the cost of the factory for the taxes, $60,000 in legal fees, $38,000 for overhauling the equipment, and $168,000 for renovating the building. These costs were paid in cash. The land, building, and equipment were appraised as 30%, 60% and 10% of the purchase price. Required: 1. Apportion the cost of the factory. B A с 1 Asset Items: Apportioned Cost Additional Cost 2 Land 2,268,000 $ 3 Building 4,536,000 $ 756,000 $ 4 Equipment 5 Total 7,560,000 $ $ $ No 1 $ $ 2. Record journal entries for the purchase on May 1. View transaction list View journal entry worksheet D Total Costs $2,328,000 60,000 168,000 $4,704,000 38,000 $ 794,000 266,000 $7,826,000 Date May 01, 2022 General Journal Land Building Equipment Cash Long Term Note Payable Debit 2,328,000 4,704,000 794,000 Credit 2,347,800 5,478,200 Ⓒ innl 3. On December 30, 2022, chemical waste was leaked from the neighboring factory. As a result, the land had a fair value of $1,250,000, and the selling cost of the land would be $50,000. The accountant determined that the value in use was $950,000. Determine if the value of land is impaired. If so, what is the amount of impairment? Carrying Value Value in Use Fair Value Impaired 4. Prepare the journal entry on December 30, 2022 for this particular issue, if any. View transaction list Amount Journal entry worksheet Record the journal entry on December 30, 2022 for the impairment, if any. (If no entry, please choose "No Entry."
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Related Book For
Cost Accounting Foundations and Evolutions
ISBN: 978-1111626822
8th Edition
Authors: Michael R. Kinney, Cecily A. Raiborn
Posted Date:
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