Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, a

Question

Crow Co. purchased some of the machinery of Hare, Inc., a bankrupt competitor, at a liquidation sale for a total cost of $33,600. Crow's cost of moving and installing the machinery totaled $3,200. The following data are available: Item-Hares net book value/List price of same item/Appraisers Estimate fair value Punch press-$20,160/$36,000/$24,000 Lathe-16,128/18,000/12,000 Welder-4,032/6,000/4,000 Required: a. Calculate the amount that should be recorded by crow Co. as the cost of each piece of equipment.

Explanation / Answer

a. Appraised values: PP 24,000 / 40,000 = 60%; Lathe 12/40 = 30%; Welder 4/40 = 10% Total Cost 33,600 + 3,200 = 36,800 x 60%, 30% & 10% b. Useful life to Crow

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