Accounting For Long Term Ass me what you wa insert Draw Design Layout References

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Accounting For Long Term Ass me what you wa insert Draw Design Layout References Mailings Review View Help Tel Calibri (Body-11A A Format Painter BIU- ipboard Font Paragraph Recording Purchase of Land McCoy's Fish House purchases a tract of land and an existing building for $$60,000. The company plans to remove the old building and construct a new restaurant on the sste. In addition to the purchase price, McCoy pays closing costs, including title insurance of $1,600. The company also pays $11,200 in property taxes, which includes $7,600 of back taxes (unpaid taxes from previous years) paid by McCoy on behalf of the seller and $3,600 due for the current fiscal year after the purchase date. Shortly after closing, the company pays a contractor $43,000 to tear down the old building and remove it from the site. McCoy is able to sell salvaged materials froen the old building for $6,400 and pays an additional $11,700 to level the land Required: Determine the amount McCoy's Fish House should record as the cost of the land. (Amounts to be deducted should be indicated by a minus sigm) price of land ost of remov Level the land Total cost of the land Allocate costs in a basket purchase Red Rock Bakery purchases land, building, and the estimated fair values of the land, buildings anequipment are S105000, s180,000, and $15,000, equipment for a single purchase price of $200,000. However, respectively, for a total estimated fair value of $300,000. Required: Determine the amounts Red Rock should record in the separate accounts for the land, the building. and the equipment. Value $200,000 200,000 200,000 Total 432 words ) Type here to search

Explanation / Answer

1) Calculation of Total Cost of land (Amounts in $)

2) Calculation of Recorded amount for Land, Building and Equipment (Amts in $)

3) Journal Entry (Amounts in $)

4) Fair Value of total Assets = Current Assets+Property, plant and equipment+Other assets

= $13.20 million+$28.80 million+$3.00 million = $45 million

Fair value of Liabilities = Current liabilities+Long term liabilities

= $6.20 million+$9.80 million = $16 million

Fair Value of Net Assets = FV of Assets - FV of Liabilities

= $45 million - $16 million = $29 million

Amount paid for Goodwill = Total cash paid - Fair Value of Net Assets

= $35 million - $29 million = $6 million

Purchase Price of land 860,000 Add: Title Insurance 1,600 Add: Property Taxes (only Back property taxes) 7,600 Add: Cost of removing the Building 43,000 Less: Salvaged Materials (6,400) Add: Cost to level the land 11,700 Total Cost of the land 917,500

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