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.