Asset A: On June 2, 2014, Columbia purchased a stamping machine at a retail price of $12,000. Columbia paid 6% sales tax on this purchase. Columbia paid a contractor $2,800 for a specially wired platform for the machine, to ensure noninterrupted power to the machine. Columbia estimates the machine will have a 4-year useful life, with a salvage value of $2,000 at the end of 4 years. The machine was put into use on July 1, 2014.
Asset B: On January 1, 2014, Columbia, Inc. signed a fixed-price contract for construction of a warehouse facility at a cost of $1,000,000. It was estimated that the project will be completed by …show more content…
Plant acquisitions for selected companies are as follows.
1. Belanna Industries Inc. acquired land, buildings, and equipment from a bankrupt company, Torres Co., for a lump-sum price of $1,000,300. At the time of purchase, Torres’s assets had the following book and appraisal values. Book Values Appraisal Values
Land $285,800 $214,350
Buildings 357,250 500,150
Equipment 428,700 428,700
To be conservative, the company decided to take the lower of the two values for each asset acquired. The following entry was made.
Equipment 428,700 Cash 1,000,300
2. Harry Enterprises purchased store equipment by making a $2,858 cash down payment and signing a 1-year, $32,867, 10% note payable. The purchase was recorded as follows.
Equipment 39,012 Cash 2,858 Notes Payable 32,867 Interest Payable 3,287
3. Kim Company purchased office equipment for $21,700, terms 2/10, n/30. Because the company intended to take the