Chico Company paid $540,000 for a basket purchase that included office furniture

Question

Chico Company paid $540,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture – $130,000; Building – $440,000, Land – $100,000. Based on this information, and rounding allocations to two decimal places, the amount of cost that would be allocated to the office furniture is closest to: (Round your intermediate percentages to 2 decimal places: ie 0.054231 = 5.42%.):

A. 104760

B 158333

C 130000

D 52500

Explanation / Answer

Answer:- The amount of cost that would be allocated to the office furniture is closest to:-$104760 (Option A).

Explanation:-Total amount paid =$540000

Market value of the all assets =$130000+$440000+$100000 =$670000

Cost allocated to Office furniture =($130000/$670000)*$540000

=$104776

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