Squeakfree Corporation is a Toronto-based manufacturer of automobile parts. On April 1, 2021 the company acquired...

 

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Squeakfree Corporation is a Toronto-based manufacturer of automobile parts. On April 1, 2021 the company acquired land and a building to be used as the company's new head office. Squeakfree issued a $2 million, four-year non-interest bearing note to the seller. Payment is to be made in four equal installments of $500,000 on March 31 of cach year. The FMV of the land and building were assessed at approximately $500,000 and $1,500,000 respectively. It has been ascertained that, given Squeakfree's credit rating and market conditions, an interest rate of 8% would properly reflect the substance and credit risk of the transaction. Required: Prepare the journal entry(ies) to record the acquisition of the land and building. Squeakfree Corporation is a Toronto-based manufacturer of automobile parts. On April 1, 2021 the company acquired land and a building to be used as the company's new head office. Squeakfree issued a $2 million, four-year non-interest bearing note to the seller. Payment is to be made in four equal installments of $500,000 on March 31 of cach year. The FMV of the land and building were assessed at approximately $500,000 and $1,500,000 respectively. It has been ascertained that, given Squeakfree's credit rating and market conditions, an interest rate of 8% would properly reflect the substance and credit risk of the transaction. Required: Prepare the journal entry(ies) to record the acquisition of the land and building.

Answer rating: 100% (QA)

Date Account Title Debit Credit April 1 2021 Land and bui... View the full answer