Problem 1: The Oscar Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $180,000. At the time of acquisition, Oscar paid $12,000 to have the assets appraised. The appraisal disclosed the following values:
Land .................................................. $120,000
Buildings ............................................. 80,000
Equipment ............................................. 40,000
What cost should be assigned to the land, buildings, and equipment, respectively?
a. $64,000, $64,000, and $64,000
b. $90,000, $60,000, and $30,000
c. $96,000, $64,000, and $32,000
d. $120,000, $80,000, and $40,000
Problem 2: Jazz Company purchased land with a current market value of $240,000. Its book value in the accounts of the seller was $130,500. In exchange for the land, Jazz issued 20,000 shares of its common stock, par $10, with an estimated market value of $14 per share. Jazz stock is not traded on an established stock exchange. What amount should Jazz record as the cost of the land?
a. $130,500
b. $200,000
c. $240,000
d. $280,000
Problem 3: During the year just ended, Morton Company made the following expenditures relating to its plant building:
Continuing and frequent repairs ..................... $160,000
Repainted the plant building ........................ 40,000
Major improvements to the electrical wiring system 128,000
Partial replacement of roof tiles ................... 56,000
How much should be charged to repair and maintenance expense during the year just ended?
a. $160,000
b. $216,000
c. $256,000
d. $328,000
Problem 4: On May 1, 2011, Lenny Corporation purchased for $690,000 a tract of land on which a warehouse and office building were located. The following data were collected concerning the property:
Current Assessed Vendor's
Valuation Original Cost
Land ............................. $280,000 $180,000
Warehouse ........................ 320,000 315,000
Office Building .................. 200,000 129,000
$800,000 $624,000
Determine the appropriate amounts that Lenny should record for the land, warehouse, and office building.