Question

on october 29th, raider red acquired a printer and office chairs for $1,000. the printer has a selling price of $700 and the office chairs have a selling price of $800. determine the historical costs for the office chairs acquired by raider red:

Answer 1

To determine the historical costs of the office chairs bought by Raider Red, one would need to allocate the $1,000 total purchase price based on the proportion of each item's selling price to the total combined selling price. If proportional allocation is used, the historical cost for the chairs is calculated to be approximately $533.33.

Step-by-step explanation:

To determine the historical costs for the office chairs acquired by Raider Red for $1,000 along with a printer, one must first know the purchase price allocated to each item. Given that the selling prices of the printer and the office chairs are $700 and $800 respectively, we cannot directly use these figures as historical costs without additional information on the actual distribution of the purchase price amongst the items.

However, assuming the purchase price is allocated based on the selling price proportion of each item, we would use a method of allocating the $1,000 based on the ratio of the individual selling prices of the printer and the chairs to their combined selling price. As a result, the allocation of costs would represent the proportion of the combined value that each item holds.

The calculation for the historical cost of the office chairs would therefore be:

Total purchase price: $1,000
Printer's selling price: $700
Office chairs' selling price: $800
Combined selling price: $700 (printer) + $800 (chairs) = $1,500

Using proportions for allocation:
Office chairs' cost allocation proportion: $800 / $1,500
Printer's cost allocation proportion: $700 / $1,500

Thus, the historical costs for the office chairs can be calculated as:
$1,000 * ($800 / $1,500) = $533.33 (rounded to the nearest cent)

This process is commonly used in scenarios where the purchase price must be divided among multiple assets.

Answer 2

The historical cost of the office chairs acquired by Raider Red is calculated at $533.33, based on the proportional cost allocation method using the selling prices of the printer and chairs combined.

Step-by-step explanation:

To determine the historical costs for the office chairs acquired by Raider Red, we must allocate the combined purchase price between the printer and the chairs based on their selling prices. The selling price of the printer is $700, and the selling price of the office chairs is $800, totaling $1,500. Since Raider Red acquired both items for $1,000, we calculate the proportion of the total cost that should be allocated to each item.

The calculation for the cost allocation is as follows:

• Cost of printer: ($700 / $1,500) * $1,000 = $466.67
• Cost of chairs: ($800 / $1,500) * $1,000 = $533.33

Thus, the historical cost of the office chairs would be $533.33.