question archive Land $398,000 Buildings 1,194,000 Equipment 796,000 Total $2,388,000 On July 6, Pronghorn Company acquired the plant assets of Doonesbury Company, which had discontinued operations
Land $398,000 Buildings 1,194,000 Equipment 796,000 Total $2,388,000 On July 6, Pronghorn Company acquired the plant assets of Doonesbury Company, which had discontinued operations
Subject:AccountingPrice:2.87 Bought7
Land $398,000
Buildings 1,194,000
Equipment 796,000
Total $2,388,000
On July 6, Pronghorn Company acquired the plant assets of Doonesbury Company, which had discontinued operations. The appraised value of the property is:
Pronghorn Company gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market price of $239 per share on the date of the purchase of the property.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer:
| No. | Account Titles and Explanation | Debit | Credit |
| Land | $497,917 | ||
| Building | $1,493,750 | ||
| Equipment | $995,833 | ||
| To Common stock (12,500 share @ $100 par value) | $1,250,000 | ||
|
To Paid in Capital in excess of par value - Common stock [(12,500 share × $239 market price per share) - $1,250,000 Common stock] |
In the question it was given that Company gave 12,500 shares of its $100 par value common stock in exchange. The stock had a market price of $239 per share on the date of the purchase of the property.
Therefore,Cost of Property on date of purchase = 12,500 shares × $239 market price per share
Cost of Property = $2,987,500
Land = (Appraised value of land / Total appraised value) × Cost of property
Land = ($398,000/2,388,000) × $2,987,500 = $497,917
Building = (Appraised value of building / Total appraised value) × Cost of property
Building = ( $1,194,000/ $2,388,000) × $2,987,500
Building = $1,493,750
Equipment = (Appraised value of Equipment / Totally appraised value) × Cost of property
Equipment = ($796,000 / $2,388,000) × $2,987,500
Equipment = $995,833
