Question 1 - Beeman Company exchanged machinery with an appraised value of $1,755,000, a recorded cost of $2,700,000 and Accumulated Depreciation of $1,350,000 with Lacey Corporation for machinery Lacey owns. The machinery has an appraised value of $1,695,000, a recorded cost of $3,240,000, and Accumulated Depreciation of $1,782,000. Lacey also gave Beeman $60,000 in the exchange. Assume depreciation has already been updated.
Required: Prepare the journal entry required in proper format to record the exchange for Lacey; assume that the exchange had commercial substance (show all calculations for partial credit review).
Question 2 - Simpson and Homer Corporation acquired an office building on three acres of land for a lump-sum price of $2,400,000. According to independent appraisals, the fair values were $1,300,000, $780,000, and $520,000 for the building, land, and furniture and fixtures, respectively.
Required: Prepare the journal entry required in proper format to record the purchase of the assets (show all calculations for partial credit review).
Question 3 - Arlington Company is constructing a building. Construction began on January 1 and was completed on December 31. Expenditures were as follows:
$2,400,000 on March 1
$1,980,000 on June 1
$3,000,000 on December 31
Arlington Company borrowed $1,200,000 on January 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 10%, 3-year, $2,400,000 note payable and an 11%, 4-year, $4,500,000 note payable.
Required: Determine the following for Arlington (show all components of your answer for partial credit review). Round any percentage to two decimal places.
a. Weighted average accumulated expenditures.
b. Actual interest for the year
c. Capitalized interest