The Wally Corporation acquired land, buildings, and equipment from a bankrupt co

Question

The Wally Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $300,000. At the time of acquisition, Wally paid $10,000 to have the assets appraised. The appraisal disclosed the following values:

Land

$ 60,000

Buildings

200,000

Equipment

140,000

What costs should be assigned to the land, buildings, and equipment, respectively?

a.

$100,000, $100,000, and $100,000

b.

$103,333, $103,333, and $103,334

c.

$45,000, $150,000, and $105,000

d.

$46,500, $155,000, and $108,500

Please explain the answer.

Thank you.

Land

$ 60,000

Buildings

200,000

Equipment

140,000

Explanation / Answer

Fair value Proportion of total Amount paid Amount allocated Land 60000 15% 310000 46500 Buildings 200000 50% 310000 155000 Equipment 140000 35% 310000 108500 Total 400000 310000 Option D is correct

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