Problem 1

Ball Company

Land - New 900,000

Cash 100,000
Land - Old 800,000
Gain on exchange of assets 200,000

Brown Company

Land - New 1,000,000

Land - Old 500,000
Cash 100,000
Gain on exchange of assets 400,000

1. Pretax gain of Ball Company 200,000

2. Pretax gain of Brown Company 400,000
3. Ball would record new land at 900,000

Problem 2

Land Building
Cost to purchase factory site 300,000
Cost to tear down old buildings (demolition) 30,000
Salvage value of materials (2,700)
Legal fees for title investigation 1,740
Architect's fees 15,600
Title insurance cost 1,200
Insurance during construction 1,300
Excavation costs 5,220
Contractors fee 1,100,000
Special assessment 3,200
Interest costs 85,000
306,140 1,234,420

1. Cost of the land 306,140

2. Cost of the building 1,234,420

Problem 3

Investment Property 300,000

 Cash 300,000

Land 370,000
Building 1,110,000
Ordinary Shares 1,480,000

Appraised Allocated
Land 460,000 370,000
Building 1,380,000 1,110,000
1,840,000 1,480,000

Machinery and Equipment 878,000

Input VAT 96,000
Cash 974,000

Land Improvements 190,000

Cash 190,000

Accumulated Depreciation 135,841

Loss on scrapping 24,159
Machinery and Equipment 160,000

C/A Depre.
January 1, 2005 160,000
December 31, 2005 128,000 32,000
December 31, 2006 102,400 25,600
December 31, 2007 81,920 20,480
December 31, 2008 65,536 16,384
December 31, 2009 52,429 13,107
December 31, 2010 41,943 10,486
December 31, 2011 33,554 8,389
December 31, 2012 26,844 6,711
June 30, 2013 24,159 2,684
135,841

Cash 40,000
Accumulated Depreciation 42,000
Loss on Sale of Machinery 6,000
Machinery and Equipment 88,000

1. Adjusted balance of Buildings 3,310,000

2. Adjusted balance of Machinery and Equip. 2,550,000
3. Loss on scrapping of machine 24,159

Problem 4

Land 2,000,000
Building 6,000,000
Property Tax Expense 297,000
Mortgage Payable 4,600,000
Cash 3,697,000

Building 342,000
Cash 342,000

Building 947,000
Modifications Expenses 124,000
Cash 1,071,000

Machinery 310,000
Patent 330,000
Ordinary Shares 40,000
Share Premium 600,000

Machinery 610,000
Franchise 500,000
Ordinary Shares 1,000,000
Share Premium 110,000

Land Improvements 509,000

Cash 509,000

Repairs and Maintenance Expense 64,000

Cash 64,000

1. Buildings 7,289,000
2. Land 2,000,000
3. Machinery 920,000
4. Share Premium 710,000
5. Intangibles 830,000