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Alpha paid $45,000 cash for the lump sum purchase. What value should be allocated to the following? (Enter only whole dollar values.) 1. Land 2. Building 3. Equipment

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emaduet2012

Answer:

Value allocation is mentioned below:

  1. Land - $ 7500
  2. Building - $15,000
  3. Equipment - $22,500

Explanation:

At first , we have to calculate the ratio of appraised value to allocate the lump sum purchase amount.

Land - $10,000

Building - $20,000

Equipment - $30,000

Total : $60,000

Acquisition price for : $45,000

Percentage of appraised value : $ 45000/60000 * 100 = 75%.

After paying the $ lump sum cash 45000, below mentioned are the values allocated to following.

Land - $ 7500

Building - $15,000

Equipment - $22,500

Total Paid :  $45000

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