Valdillas Music Store acquired land and an old building in exchange for 50,000 shares of its common

Question:

Valdilla’s Music Store acquired land and an old building in exchange for 50,000 shares of its common stock, par $0.50, and cash of $80,000. The auditor ascertains that the company’s stock was selling for $15 per share when the purchase was made. The following additional costs were incurred to complete the transaction:

Legal cost to complete transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000

Property tax for previous year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000

Cost of building demolition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,000

Salvage value of demolished building . . . . . . . . . . . . . . . . . . . . . . . . . (6,000)

What entry should be made to record the acquisition of the property?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...