# Acct 305 week 1 homework

Week 1 Homework Solutions

Exercises E10-1, E10-8 & E10-14, and E10-18

Exercise 10-1

## E 10–1: Acquisition costs; land and building

LO10–1

On March 1, 2013, Beldon Corporation purchased land as a factory site for \$60,000. An old building on the property was demolished, and construction began on a new building that was completed on December 15, 2013. Costs incurred during this period are listed below:

Salvaged materials resulting from the demolition of the old building were sold for \$2,000.

Required:

Determine the amounts that Beldon should capitalize as the cost of the land and the new building.

Exercise 10-8

## E 10–8: Lump-sum acquisition

LO10–2

Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was \$900,000. According to independent appraisals, the fair values were \$450,000 (building A) and \$250,000 (building B) for the buildings and \$300,000 for the land.

Required:

Determine the initial valuation of the buildings and the land.

Exercise 10–14

## E 10–14: Disposal of property, plant, and equipment

LO10–6

Funseth Farms Inc. purchased a tractor in 2010 at a cost of \$30,000. The tractor was sold for \$3,000 in 2013. Depreciation recorded through the disposal date totaled \$26,000.

Required:

• 1. Prepare the journal entry to record the sale.
• 2. Assuming that the tractor was sold for \$10,000, prepare the journal entry to record the sale.

Exercise 10–18

## E 10–17: Nonmonetary exchange

LO10–6

The Bronco Corporation exchanged land for equipment. The land had a book value of \$120,000 and a fair value of \$150,000. Bronco paid the owner of the equipment \$10,000 to complete the exchange which has commercial substance.

E 10–18: Nonmonetary exchange

LO10–6

[This is a variation of the previous exercise.]

Required:

Assume the same facts as in Exercise 10–17 except that Bronco received \$10,000 from the owner of the equipment to complete the exchange.

• 1. What is the fair value of the equipment?
• 2. Prepare the journal entry to record the exchange.