Skysong Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Skysong Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an effort to expand its production capacity to meet the increased demand for its product, the company recently made several acquisitions of plant and equipment. Rob Joffrey, newly hired in the position of fixed-asset accountant, requested that Danny Nolte, Skysong's controller, review the following transactions. Transaction 1: On June 1, 2025, Skysong Company purchased equipment from Wyandot Corporation. Skysong issued a $30,800,4- year, zero-interest-bearing note to Wyandot for the new equipment. Skysong will pay off the note in four equal installments due at the end of each of the next 4 years. At the date of the transaction, the prevailing market rate of interest for obligations of this nature was 11%. Freight costs of $429 and installation costs of $510 were incurred in completing this transaction. The appropriate factors for the time value of money at a 11% rate of interest are given below. Future value of $1 for 4 periods 1.52 Future value of an ordinary annuity for 4 periods 4.71 Present value of $1 for 4 periods 0.66 Present value of an ordinary annuity for 4 periods 3.10 Transaction 2: On December 1, 2025, Skysong Company purchased several assets of Yakima Shoes Inc., a small shoe manufacturer whose owner was retiring. The purchase amounted to $209,000 and included the assets listed below. Skysong Company engaged the services of Tennyson Appraisal Inc., an independent appraiser, to determine the fair values of the assets which are also presented below. Yakima Book Value Fair Value Inventory $54,400 $48,000 Land 40,100 80,000 Buildings 68,600 122,000 $163,100 $250,000 During its fiscal year ended May 31, 2026, Skysong incurred $7,580 for interest expense in connection with the financing of these assets. Transaction 3: On March 1, 2026, Skysong Company exchanged a number of used trucks plus cash for vacant land adjacent to its plant site. (The exchange has commercial substance.) Skysong intends to use the land for a parking lot. The trucks had a combined book value of $36,130, as Skysong had recorded $18,530 of accumulated depreciation against these assets. Skysong's purchasing agent, who has had previous dealings in the secondhand market, indicated that the trucks had a fair value of $50,440 at the time of the transaction. In addition to the trucks, Skysong Company paid $20,550 cash for the land. (b) For each of the three transactions described above, determine the value at which Skysong Company should record the acquired assets. (Round answers to O decimal places e.g. 58,971.) Value Transaction 1 $ Transaction 2 Inventory SA $ Land $ Building SA Skysong Company, a manufacturer of ballet shoes, is experiencing a period of sustained growth. In an effort to expand its production capacity to meet the increased demand for its product, the company recently made several acquisitions of plant and equipment. Rob Joffrey, newly hired in the position of fixed-asset accountant, requested that Danny Nolte, Skysong's controller, review the following transactions. Transaction 1: On June 1, 2025, Skysong Company purchased equipment from Wyandot Corporation. Skysong issued a $30,800,4- year, zero-interest-bearing note to Wyandot for the new equipment. Skysong will pay off the note in four equal installments due at the end of each of the next 4 years. At the date of the transaction, the prevailing market rate of interest for obligations of this nature was 11%. Freight costs of $429 and installation costs of $510 were incurred in completing this transaction. The appropriate factors for the time value of money at a 11% rate of interest are given below. Future value of $1 for 4 periods 1.52 Future value of an ordinary annuity for 4 periods 4.71 Present value of $1 for 4 periods 0.66 Present value of an ordinary annuity for 4 periods 3.10 Transaction 2: On December 1, 2025, Skysong Company purchased several assets of Yakima Shoes Inc., a small shoe manufacturer whose owner was retiring. The purchase amounted to $209,000 and included the assets listed below. Skysong Company engaged the services of Tennyson Appraisal Inc., an independent appraiser, to determine the fair values of the assets which are also presented below. Yakima Book Value Fair Value Inventory $54,400 $48,000 Land 40,100 80,000 Buildings 68,600 122,000 $163,100 $250,000 During its fiscal year ended May 31, 2026, Skysong incurred $7,580 for interest expense in connection with the financing of these assets. Transaction 3: On March 1, 2026, Skysong Company exchanged a number of used trucks plus cash for vacant land adjacent to its plant site. (The exchange has commercial substance.) Skysong intends to use the land for a parking lot. The trucks had a combined book value of $36,130, as Skysong had recorded $18,530 of accumulated depreciation against these assets. Skysong's purchasing agent, who has had previous dealings in the secondhand market, indicated that the trucks had a fair value of $50,440 at the time of the transaction. In addition to the trucks, Skysong Company paid $20,550 cash for the land. (b) For each of the three transactions described above, determine the value at which Skysong Company should record the acquired assets. (Round answers to O decimal places e.g. 58,971.) Value Transaction 1 $ Transaction 2 Inventory SA $ Land $ Building SA
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
Describe what happens if you put the double quotes in the print statement of HelloWorld.java on different lines, as in this code fragment: System.out.println("Hello, World");
-
Sussman Industries purchased a drilling machine for $50,000 and paid cash. Sussman expects to use the machine for ten years after which it will have no value. It will be depreciated straight-line...
-
During its first year of operations, Foyle Corporation had the following transactions pertaining to its common stock . Jan. 10 Issued 70,000 shares for cash at $5 per share. July 1 Issued 40,000...
-
Use the information for Prosperous Bank in Exercise E13-27 to compute the total cost for each revenue-generating area using the algebraic method. Data From Exercise E13-27:- Prosperous Bank has three...
-
Liang Company began operations on January 1, 2014. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad...
-
Use the given stock table to find the closing price for ABC Technologies (ABC). 52-Week Net Div High Low Stock 70.34 42.73 ABCTch SYM Amt ABC 3.00 Yld % PE 5.5 17 Vol 100s Close Chg 5915 54.58 1.10...
-
You want to determine the number of docks required for a receiving and shipping facility. The costs of operating a truck are $ 35.00 per hour and the cost of operating a dock is $ 50 per hour. 2...
-
A company produces two products, Product A, which sells for $4,800 per unit, and Product B, which sells for $9,600 per unit, using three different activities: Design, which uses engineering hours as...
-
Starting from rest, a bicyclist pedals a bicycle such that the angular acceleration of the wheels is a constant 1.10 rad/s. The bicycle wheels are 36.5 cm in radius. (a) What is the magnitude of the...
-
10. Which of the following structures is shaped like a hollow cylinder made out of tubulin proteins? a. Intermediate filaments b. Microtubules c. Microfilaments d. Flagella 11. The cell organelle...
-
I claim that in the extreme stylized version of the lemons problem, cheating and fraud would not be a concern for individual car buyers. Why do I make that claim? In other words, explain carefully...
-
7. Pili are also called a. microvilli. b. fimbriae. c. cilia. d. flagella. 8. The structures that can move fluid, mucus, or cells over the surface of a cell are a. microvilli. b. fimbriae. c. cilia....
-
Which action is not considered an act discreditable to the accounting profession? a) Being finally determined by a court of competent jurisdiction to have violated any of the federal...
-
Arlington Merchants reported the following on its income statement for the fiscal years ending December 31, 2016 and 2015. 2016 2015 Sales $4,857,500 $4,752,900 Cost of goods sold 3,258,950 3,207,000...
-
Solve the following standard maximum problem by the simplex algorithm: maximize: 2x1 x2 x3 + 4x4 - x1 + x2 3 subject to: x3 + X4 6 x + 2x2 + x3 + 2x4 10 x; 0 for all i
-
Verify that the list in formula (8) constitutes a basic feasible solution for the winery problem (3)-(4).
-
A small software production company wants to maximize the benefit of the time and money spent by its staff in working on development projects. It produces software that is roughly classified as one...
Study smarter with the SolutionInn App