A company purchased land, a building, and equipment for one price of $800,000. The estimated fair values of the land, building, and equipment are $100,000, $700,000, and $200,000, respectively. At what amount would the company record the land?

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valetta valetta · Answer 1 · 2019-11-22T06:15:15+01:00

Answer:

$80,000

Step-by-step explanation:

Given:

Total purchase amount = $800,000

Fair values for:

Land = $100,000

Building = $700,000

Equipment = $200,000

Total fair value of the purchase = $100,000 + $700,000 + $200,000

= $1,000,000

Allocation Percentage Amount of Basket Purchase for land

= ( Fair value ÷ Total fair value of the purchase ) × 100%

= ( $100,000 ÷ $1,000,000 ) × 100%

= 10%

Hence,

Amount at which the land would be recorded

= Allocation Percentage × Total purchase amount

= 10% × $800,000

= $80,000

Parrain Parrain · Answer 2 · 2022-04-01T12:31:58+02:00

Based on the estimated fair values of the land, building , and equipment, the amount the land will be recorded at is $80,000.

This amount can be found by the formula:

= Estimated fair value of land / (Total estimated fair value of assets) x Purchase price

Solving gives:
= 100,000 / (100,000 + 700,000 + 200,000) x 800,000

= 100,000 / 1,000,000 x 800,000

= $80,000

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