Create an Account

Already have account?

Forgot Your Password ?

Home / Questions / Colacci Corporation is aCalgary-based manufacturer of gym equipment. In early January 2018...

Colacci Corporation is aCalgary-based manufacturer of gym equipment. In early January 2018,the company acquired land and a building to be used as thecompany's new head office. Colacci issued a $2M,

Colacci Corporation is aCalgary-based manufacturer of gym equipment. In early January 2018,the company acquired land and a building to be used as thecompany's new head office. Colacci issued a $2M, five-yearnon-interest bearing note to the seller. Payment is to be made infive equal instalments of $400,000 at the end of each year. As aresult of a depressed real estate market, the fair value of thebuilding cannot be readily determined. However, it has beenascertained that, given Colacci 's credit rating and marketconditions, an interest rate of 9% would properly reflect thesubstance and credit risk of the negotiated payment schedule.

Otherinformation:

- One third of the total value of the acquisition isattributable to the land. o The building is expected to have auseful life of 25 years.

- Throughout the year, Colacci incurred maintenance costs of$87,000 and paid them in cash.

- A parking lot was built at a cost of $100,000 cash. The workwas completed on July 1 and is expected to have a useful life of 10years.

Required

1. Prepare all journal entries thatare required to record the above events and transactions. Round allvalues to the nearest dollar.

Jun 07 2021 View more View Less

Answer (Solved)

question Subscribe To Get Solution

Related Questions