Question

purchased equipment, a building, and land for one price of $6,050,500. The estimated fair values of the equipment, building, and land are $1,000,000, $7,000,000, and $2,000,000, respectively. At what amount would the company record the building

Answer 1

the amount that the company would record the building is $ 4,235,350

Step-by-step explanation:

Because the Assets (Equipment, Building and Land) purchased will be depreciated diferently, there is need to allocate the purchase cost to the respective assets.

Fair Values are used to Apportion cost of Assets as follows :

Equipment

1,000,000/ 10,000,000 × $6,050,500 = $605,050

Buildings

7,000,000/ 10,000,000 × $6,050,500 = $ 4,235,350

Land

2,000,000/ 10,000,000 × $6,050,500 = $1,210,100