# proper

knohe_

Solve the following two problems in which you are asked to apply proper asset valuation. Submit your solutions to both problems on the same page of one Excel document.

Problem 1

You have been given the following information for Ethan Company as of June 1, 2010. Ethan Company purchased a parcel of land and then incurred specific costs for the construction of a new building. Below is a list of these costs:

 Cost of Parking Lot and gates=\$14,000 Cost of filling the building site= \$10,000 Legal Fees to buy land= \$2,000 Cost of driveway= \$9,000 Property Taxes for Jan 1,2010 to June 1, 2010= \$5,000 Title Insurance= \$2,000 Interest on the construction loan= \$13,000 Proceeds from the sale of salvage materials= (\$1500) Purchase price of land= \$200,000 Cost of the building construction= \$650,000 Cost of razing building on lot= \$9,500 Cost of grading the lot= \$5,000

1. Using Excel, determine the accounts that are affected by the above transactions and the final balance of each account. (Note: The interest on the construction loan will be applied to the cost of the land.)

Problem 2

On April 25, 2010, Bullseye Company purchased all of the outstanding common stock of Vista Company, paying \$14,000,000. The book values and fair values of Vista's assets and liabilities acquired are shown below in dollar amounts:

 Accounts Book Value Fair Value Accounts Receivables \$1,900,000 \$1,725,000 Inventories \$2,800,000 \$4,000,000 Accounts Payable \$2,000,000 \$2,000,000 Property, Plant and Equipment \$8,000,000 \$12,625,000 Bonds Payable \$4,600,000 \$4,225,000

1. Using Excel, prepare the journal entry to record the acquisition by Bullseye Company.
2. Submit your solution in same Excel file as for Problem 1.
• 4 years ago
• 5