Indiv 4 Final.docx - Accounting 3220 Group Exercise#4 Fall 2018 Part 1 Meurer Inc purchased the following assets and constructed a building as well All

Indiv 4 Final.docx - Accounting 3220 Group Exercise#4 Fall...

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Accounting 3220 Group Exercise #4 Fall 2018 Part 1: Meurer, Inc. purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1& 2 These assets were purchased as a lump sum for $186,000 cash. The following information was gathered. Description Initial Cost on Seller's Books Depreciation to Date on Seller's Books Book Value on Seller's Books Appraised Value Machinery $65,000 $30,000 $35,000 $160,000 Office Furniture 25,000 10,000 15,000 40,000 Machinery: 160,000/200,000=0.80. 0.80*186,000= $148,800 Office Furniture: 40,000/200,000=0.20. 0.20*186,000= $37,200 Machinery $148,800 Office Furniture $37,200 Cash $186,000 Asset 3 This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in as follows. Cost of machinery traded $150,000 Accumulated depreciation to date of sale 60,000 Fair value of machinery traded 96,000 Cash Received 20,000 Fair value of machinery acquired 76,000 $76,000+$20,000-$90,000(book value) =$6000. 20,000/(20,000+76,000)=0.208*6000=$1,250=gain. Machinery $71,250 Cash $20,000 Accumulated Depreciation $60,000 Machinery $150,000 Gain on Sale $1,250
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Asset 4: Machinery was acquired by issuing 1,000 shares of $1 par value common stock. The stock had a market
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