Selected accounts included in the property, plant, and equipment section of
Flipper Corporation’s balance sheet at December 31, 2014, had the following
balances:
Land $ 400,000
Land improvements 130,000
Buildings 2,000,000
Machinery and
equipment
800,000
During 2015, the following transactions occurred:
a. A tract of land was acquired for $200,000 as a potential future
building site from Flopper Corp.
b. A plant facility consisting of land and building was acquired from
Flimsy Company in exchange for 20,000 shares of Flipper’s common
stock. On the acquisition date, Flipper’s stock had a closing market
price of $42 per share on a national stock exchange. The plant facility
was carried on Flimsy’s books at $178,000 for land and $520,000 for
the building at the exchange date. Current appraised values for the
land and the building, respectively, are $200,000 and $800,000. The
building has an expected life of forty years with a $20,000 salvage
value.
c. Items of machinery and equipment were purchased from
Guess Who Equipment at a total cost of $400,000. Additional
costs were incurred as follows: freight and unloading,
$13,000; installation, $26,000. The equipment has a useful
life of ten years with no salvage value.
d. Expenditures totaling $ 120,000 were made for new parking
lots, street, and sidewalks at the corporation’s various plant
locations. These expenditures had an estimated useful life of
fifteen years.
e. Research and development costs were $110,000 for the year.
Required: Indicate the capitalized cost of each asset
acquired during 2015. Prepare the General Journal entries
for any amortization and depreciation expense recorded for
each of the acquired items in 2015. If no entry is necessary,
write “no entry.”
Capitalized Cost:
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LandacquiredfromFlopperCorp. |
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LandacquiredfromFlimsy |
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BuildingacquiredfromFlimsy |
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Machineryandequipmentacquiredfrom Guess WhoEquipment |
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Landimprovements |
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Researchanddevelopment |
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