A company purchases property that includes land, buildings and equipment for $4.
ID: 2400174 • Letter: A
Question
A company purchases property that includes land, buildings and equipment for $4.9 million. The company pays $172,000 in legal fees, $212,000 in commissions, and $111,000 in appraisal fees. The land is estimated at 21%, the buildings are at 41%, and the equipment at 38% of the property value. uirenthacquielion cos of basket purchase (Enter your answerin whole dollars Determine the total acquisition cost of this "basket purchase." (Enter your answer in whole dollars and not in millions.) a. Acquisition cost b. Allocate the total acquisition cost to the individual assets acquired. (Enter your answers in whole dollars and not in millions.) Land Buildings EquipmentExplanation / Answer
Answer:
1
Acquisition cost
5,395,000
Working for Acquisition cost
Acquisition cost
4,900,000
purchases property that includes land,
buildings and equipment
Add:
legal fees
172000
commissions,
212000
appraisal fees
111,000
495000
Acquisition cost
5,395,000
________________________________________________
2
Allocation of the total Acquisition cost to the individual assets
Land = 5395000x21% =1,132,950
Building =5395000x41% =2,211,950
Equipment =5395000x31% =2,050,100
Land
1132950
Building
2211950
Equipment
2050100
____________________________________________________
3
Description
Debit $
Credit $
Land
1132950
Building
2211950
Equipment
2050100
Cash (5395000*35%)
1888250
Notes payable (5395000*65%)
3506750
Acquisition cost
5,395,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.