Question

A warehouse supply company purchased land, a building, and equipment in a lump-sum purchase for $495,000.  An...

A warehouse supply company purchased land, a building, and equipment in a lump-sum purchase for $495,000.  An independent appraisal set the value of the land at $296,000, the building at $210,900, and the equipment at $62,700.  Immediately following the purchase, the company spent $24,200 renovating the building to get it ready for its intended use.  At what amount should the warehouse supply company record each new asset - Land, Building, and Equipment, respectively? (Round to the nearest whole percentage if using the weighted average method.)

A.

$165,000, $165,000, and$165,000
B.

$257,400, $207,350, and $54,450
C.

$258,821, $205,551, and $54,828
D.

$269,984, $192,104, and $57,112
E.

$296,000, $235,100, and $62,700
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

“weighted average method” will be used to allocate the purchase price by taking into consideration the appraisal value of assets

Weight average method:

Asset

Appraisal value

Weight

Land

296000

52%

Building

210900

37&

Equipment

62700

11%

Total

569600

100%

* Round to the nearest whole percentage

Allocation of purchase price:

Land = 495000*52%=257400

Building = 495000*37%=183150+24200=207350

Equipment = 495000*11%= 54450

Please like this answer, it helps me a lot. Thank you

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Bowie Company made a lump sum purchase of land, building, and equipment. The following were the...
Bowie Company made a lump sum purchase of land, building, and equipment. The following were the appraised values of each element: PP&E Element Amount Land $10,000 Building 25,000 Equipment 45,000 Bowie paid $65,000 cash for the lump sum purchase. What value should be allocated to the building? (Enter only whole dollar values.)
Recording a Lump-Sum Acquisition Freeman Company purchased a tract of land on which were located a...
Recording a Lump-Sum Acquisition Freeman Company purchased a tract of land on which were located a warehouse and an office building. The cash purchase price was $140,000 plus $10,000 in fees connected with the purchase. The following information relates to the property. Tax Assessment Seller’s Book Value Original Cost Land $20,000 $10,000 $10,000 Warehouse 40,000 20,000 60,000 Building 60,000 50,000 80,000 Prepare the journal entry to record this purchase. Account Name Dr. Cr. Land Warehouse Building Cash
A company purchased land with a building for a lump-sum cost of $2,570,000 ($500,000 paid in...
A company purchased land with a building for a lump-sum cost of $2,570,000 ($500,000 paid in cash and thebalance on a long-term note). It was estimated that the land and building had market values of $600,000 and$2,400,000, respectively. Determine the cost to be apportioned to the land and to the building.
Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $1,700,000....
Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $1,700,000. According to independent appraisals, the fair values were $810,000 (building A) and $360,000 (building B) for the buildings and $630,000 for the land. Determine the initial valuation of the buildings and the land. Building A Building B Land
A company acquired an office building on three acres of land for a lump-sum price of...
A company acquired an office building on three acres of land for a lump-sum price of $2,400,000. The building was completely equipped. According to independent appraisals, the fair values were $1,300,000, $780,000, and $520,000 for the building, land, and equipment, respectively. At what amount would the company record the building? Multiple Choice $720,000. $1,200,000. None of these answer choices are correct. $1,300,000.
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance $ 26,000 Legal fees for drawing the contract 5,000 Pro-rated property taxes for the period after acquisition 46,000 State transfer fees 5,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent...
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance $ 35,000 Legal fees for drawing the contract 9,500 Pro-rated property taxes for the period after acquisition 55,000 State transfer fees 5,900 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.6 and $1.2 million, respectively. Shortly after acquisition, Samtech spent...
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech...
Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance $ 36,000 Legal fees for drawing the contract 10,000 Pro-rated property taxes for the period after acquisition 56,000 State transfer fees 6,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $1 million, respectively. Shortly after acquisition, Samtech spent...
Abner and Baker paid $160,000 for a group purchase of​ land, building, and equipment. At the...
Abner and Baker paid $160,000 for a group purchase of​ land, building, and equipment. At the time of the​ acquisition, the land had a market value of $85,000​, the building $68,000​, and the equipment $17,000. Journalize the​ lump-sum purchase of the three assets for a total cost of $160,000​, the amount for which the business signed a note payable. ​(Record a single compound journal entry. Record debits​ first, then credits. Select the explanation on the last line of the journal...
The Claxton Company acquired an office building on three acres of land for a lump-sum price...
The Claxton Company acquired an office building on three acres of land for a lump-sum price of $2,800,000. The building was completely furnished. According to independent appraisals, the fair values were $1,680,000, $2,100,000, and $420,000 for the building, land, and furniture and fixtures, respectively. The initial values of the building, land, and furniture and fixtures would be: Building, Land, Fixtures a. $ 1,680,000 $ 2,100,000 $ 420,000 b. $ 1,120,000 $ 1,400,000 $ 280,000 c. $ 1,400,000 $ 1,120,000 $...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT