Acquisition of Land and Building for Stock and Cash
Valdilla’s Music Store acquired land and an old building in exchange for 50,000 shares of its common stock, par $0.50, and cash of $80,000. The auditor ascertains that the company’s stock was selling for $15 per share when the purchase was made. The following additional costs were incurred to complete the transaction:
|
Legal cost to complete transaction |
$10,000 |
|
Property tax for previous year |
30,000 |
|
Cost of building demolition |
21,000 |
|
Salvage value of demolished building |
(6,000) |
What entry should be made to record the acquisition of the property?