)The City of Pebble Beach gives the company 5 acres of land as a plant site. The
ID: 2376599 • Letter: #
Question
)The City of Pebble Beach gives the company 5 acres of land as a plant site. The fair value of this land is determined to be $84,800.(b)14,000 shares of common stock with a par value of $54 per share are issued in exchange for land and buildings. The property has been appraised at a fair value of $848,000, of which $183,200 has been allocated to land and $664,800 to buildings. The stock of Impala Company is not listed on any exchange, but a block of 100 shares was sold by a stockholder 12 months ago at $70 per share, and a block of 200 shares was sold by another stockholder 18 months ago at $63 per share.(c)No entry has been made to remove from the accounts for Materials, Direct Labor, and Overhead the amounts properly chargeable to plant asset accounts for machinery constructed during the year. The following information is given relative to costs of the machinery constructed.Materials used$13,000Factory supplies used980Direct labor incurred16,690Additional overhead (over regular) caused by construction ofmachinery, excluding factory supplies used2,880Fixed overhead rate applied to regular manufacturing operations60% of direct labor costCost of similar machinery if it had been purchased fromoutside suppliers44,990
Explanation / Answer
(a)
Land.................................................................................................... ..............................................................................................................
84,800
Contribution Revenue............................................................
84,800
(b)
Land.................................................................................................... ..............................................................................................................
183,200
Buildings..............................................................................................
664,800
Common Stock ($54 X 14,000)..............................................
756,000
Additional Paid-in Capital*...................................................
72,000
*Since the market value of the stock is not determinable, the market value of the property is used as the basis for recording the asset and issuance of the stock.
(c)
Machinery...........................................................................................
44,990
Materials..................................................................................
13,000
Direct Labor...........................................................................
16,990
Factory Overhead...................................................................
15,000*
*Fixed overhead applied (60% X $16,990)
$ 10,194
Additional overhead
2,880
Factory supplies used
980
$14,054
(a)
Land.................................................................................................... ..............................................................................................................
84,800
Contribution Revenue............................................................
84,800
(b)
Land.................................................................................................... ..............................................................................................................
183,200
Buildings..............................................................................................
664,800
Common Stock ($54 X 14,000)..............................................
756,000
Additional Paid-in Capital*...................................................
72,000
*Since the market value of the stock is not determinable, the market value of the property is used as the basis for recording the asset and issuance of the stock.
(c)
Machinery...........................................................................................
44,990
Materials..................................................................................
13,000
Direct Labor...........................................................................
16,990
Factory Overhead...................................................................
15,000*
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