I. RESUELVA Included among Gleason Company\'s assets is land purchased for $50,0
ID: 2329268 • Letter: I
Question
I. RESUELVA Included among Gleason Company's assets is land purchased for $50,000 and equipment for $100,000. After using the equipment for three years, Gleason transferred the equipment to a newly created subsidiary, Bromiley Company, along with the land plus cash of $25,000 in exchange for 20,000 shares of Bromiley's $5 par value common stock. At the date of transfer the land and 'equipment had fair values of $72,000 and $65,000, respectively. Gleason had been depreciating the equipment on a straight-line basis over ten years with no salvage value. Required A) Prepare the journal entry that should be made by Gleason Company when transferring the assets to Bromiley Company B) Prepare the journal entry that should be made by Bromiley Company to record receipt of the assets from Gleason Company. Gleason Co. Journal Entry TL - Transferred Land Entry GLExplanation / Answer
As per policy, only one question is allowed to answer at a time, so answering q 1 here :
Answer 1) A : Books of Gleason Company: Debit $ Credit $ Debit Acc Dep - Eq (100000*10%*3years) 30000 Debit Common Stock in Bromiley 145000 Credit Land 50000 Credit Cash 25000 Credit Equipment 100000 (being transfer of assets to Bromiley against 20000 CS of $5 par) B : Books of Bromiley Company : Debit Cash 25000 Debit Land (fair value) 72000 Debit Equipment (fair value) 65000 Credit Common Stock 100000 Credit Paid in Capital in excess of par - CS 62000 (being transfer of assets from Gleason at fair value against 20000 cs of $5 par)