Allocation of Package Purchase Price Tamock Company purchased a plant from one o

Question

Allocation of Package Purchase Price Tamock Company purchased a plant from one of its suppliers. The $950.000 purchase price included the land, a building, and factory machinery. Tamock also paid $5.000 in legal fees to negotiate the purchase of th- plant. An appraisal showed the following values for the items purchased: Assessed Value Property Land Building Machinery $126,000 36,000 288,000 5900,000 Total Using the assessed value as a guide, allocate the total purchase price of the plant to the land, building, and machinery accounts in Tamock Company's records Allocation of Asset Purchase Price Land Building Machinery Total

Explanation / Answer

Allocation of purchase price

Assets Assessed value Allocation of purchase price Land 126000 955000*126000/900000 133700 Building 486000 955000*486000/900000 515700 Machinery 288000 955000*288000/900000 305600 Total 900000 955000

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