Question

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 entry​ table.)

Answer 1

Asset	Market value	Percentage of market value	Allocated cost
Land	85,000	85,000/170,000 = 50%	160,000 x 50% = 80,000
Building	68,000	68,000/170,000 = 40%	160,000 x 40% = 64,000
Equipment	17,000	17,000/170,000 = 10%	160,000 x 10% = 16,000
Total	170,000	100%	160,000

Journal

1	Land	80,000
	Building	64,000
	Equipment	16,000
	Note payable		160,000
	(To record purchase of assets)