Question

Terps Company purchased a plant, including land, building, and machinery, for $110,000. These items were carried on the books of the seller as follows: land, $30,000; building, $80,000, and machinery, $40,000. Immediately after the purchase, the assets were appraised at the following values: land, $24,000; building, $30,000, and machinery, $66,000. What cost should the company record for the land, building and machinery

Answer 1

Land = $22,000

Building = $27,500

Machinery = $60,500

Step-by-step explanation:

Use the appraised values to apportion the Purchase Price ($110,000) to the asset categories.

Total appraised value = $24,000 + $30,000 + $66,000 = $120,000