On April 1, 2014, Gloria Estefan Company received a condemnation award of $1,070

Question

On April 1, 2014, Gloria Estefan Company received a condemnation award of $1,070,700 cash as compensation for the forced sale of the company’s land and building, which stood in the path of a new state highway. The land and building cost $149,400 and $697,200, respectively, when they were acquired. At April 1, 2014, the accumulated depreciation relating to the building amounted to $398,400. On August 1, 2014, Estafan purchased a piece of replacement property for cash. The new land cost $224,100, and the new building cost $996,000. Prepare the journal entries to record the transactions on April 1 and August 1, 2014.

Aug. 1

Explanation / Answer

Particulars DR CR Cash 10,70,700 Accumulated Depreciation—Buildings 3,98,400 Land 1,49,400 Buildings 6,97,200 Gain on Disposal of Plant Assets 6,22,500 Land 224100 Buildings 996000 Cash 1220100 26,89,200 26,89,200

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