QS 9-3 Lump-sum purchase LO1Xcel On April 14, 2017, Orchid Company, a new Thai R

Question

QS 9-3 Lump-sum purchase LO1Xcel On April 14, 2017, Orchid Company, a new Thai Restaurant, purchased land and a building for a total price of $540,000, paying cash of $85,000 and borrowing the balance from the bank. The bank app the land at $320,000 and the building at $180,000. Complete the following table and prepare the entry to record the purchase. Appraised Values Ratio of Individual Appraised Value to Total Appraised Value (a) ÷ Total Appraised Value Cost Allocation (b) × Total Actual Cost PPE Item Land Building Totals

Explanation / Answer

Complete following table :

Journal entry :

PPE item Apppraised Values Ratio of individual appraised value to total appraised value Cost Allocation Land 320000 64% 540000*64%=345600 Building 180000 36% 540000*36%=194400 Total 500000 100% 540000

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