Exercise 10-25 On April 1, 2017, Headland Company received a condemnation award

Question

Exercise 10-25 On April 1, 2017, Headland Company received a condemnation award of $464,400 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 $64,800 and $302,400, respectively, when they were acquired. At April 1, 2017, the accumulated depreciation relating to the building amounted to $172,800. On August 1, 2017, Headland purchased a piece of replacement property for cash. The new land cost $97,200, and the new building cost $432,000 Prepare the journal entries to record the transactions on April 1 and August 1, 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit April 1 Aug. 1

Explanation / Answer

In the books of Headland Company:

Date Account Title and Explanation Debit Credit $ $ April 1 Cash 464,400 Accumulated Depreciation : Building 172,800 Land 64,800 Building 302,400 Gain on Disposal of Plant Assets 270,000 To record sale of plant assets Aug 1 Land 97,200 Buildings 432,000 Cash 529,200 To record purchase of plant assets

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