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
• Fall '19

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