Sutherland Equipment Ltd. has a choice about how it records the acquisition of property, plant, and equipment in return for shares. Make the journal entries for each of the following cases:
Case A-Issue shares and buy the assets in separate transactions:
Sutherland Equipment Ltd. issued 7,000 common shares for cash of $1,460,000. In a separate transaction, Sutherland then used the cash to purchase an office building for $900,000 and equipment for $560,000. Journalize the two transactions.
Case B-Issue shares to acquire the assets:
Sutherland Equipment Ltd. issued 7,000 common shares to acquire an office building valued at $900,000 and equipment worth $560,000. Journalize this transaction.
Compare the balances in all accounts in Case A and Case B. Are the account balances similar or different?