Reference no: EM131120001
Solve the following two problems in which you are asked to apply proper asset valuation. Submit your solutions to both problems on the same page of one Excel document.
Problem 1
You have been given the following information for Ethan Company as of June 1, 2010. Ethan Company purchased a parcel of land and then incurred specific costs for the construction of a new building. Below is a list of these costs:
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Cost of Parking Lot and gates=$14,000
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Cost of filling the building site= $10,000
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Legal Fees to buy land= $2,000
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Cost of driveway= $9,000
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Property Taxes for Jan 1,2010 to June 1, 2010= $5,000
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Title Insurance= $2,000
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Interest on the construction loan= $13,000
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Proceeds from the sale of salvage materials= ($1500)
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Purchase price of land= $200,000
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Cost of the building construction= $650,000
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Cost of razing building on lot= $9,500
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Cost of grading the lot= $5,000
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1. Using Excel, determine the accounts that are affected by the above transactions and the final balance of each account. (Note: The interest on the construction loan will be applied to the cost of the land.)
2. Please prepare your solution in an Excel file.
Problem 2
On April 25, 2010, Bullseye Company purchased all of the outstanding common stock of Vista Company, paying $14,000,000. The book values and fair values of Vista's assets and liabilities acquired are shown below in dollar amounts:
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Accounts
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Book Value
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Fair Value
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Accounts Receivables
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$1,900,000
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$1,725,000
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Inventories
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$2,800,000
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$4,000,000
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Accounts Payable
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$2,000,000
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$2,000,000
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Property, Plant and Equipment
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$8,000,000
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$12,625,000
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Bonds Payable
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$4,600,000
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$4,225,000
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1. Using Excel, prepare the journal entry to record the acquisition by Bullseye Company.
2. Submit your solution in same Excel file as for Problem 1.