Question

How do I do a basket purchase of assets?

Answer 1

It is a situation where a number of assets are acquired as a group in a single transaction. It arises when the buyer has the opportunity to acquire a number of assets at a price below their combined market values. In this case the accountant typically records cost of assets individually in the fixed asset register. It is done by call allocating the purchase price amongst the assets based on their relative fair market values.

The formula to find out the value of each individual asset is as follows:-

Asset value= Fair value of asset under consideration/Fair value of all fixed assets ×Lump sum amount paid.