Question

Assets acquired in a basket purchase are valued based on:

Multiple Choice
a)Their cost plus the difference between their cost and fair values.
b)Their relative fair values.
c)Their assessed valuation

Answer 1

In a basket purchase, individual assets are valued based on their relative fair values, with the total cost allocated proportionally among them.

Step-by-step explanation:

Assets acquired in a basket purchase are valued based on their relative fair values. This method involves allocating the total cost of the basket purchase among the individual assets based on their respective fair values at the time of acquisition. It is the fair value of each asset in relation to the fair values of all the assets in the basket that determines the amount allocated to each asset.