Question

3. City Developers purchased a neighborhood company for $4,500,000 cash, on 6/15/2018, acquiring the following assets in the package. Cash for assets exchange was made on the contract date. Seller's Book Value $872,000 $2,350,000 $456,000 $83,000 $41,000 $3.802,000 Fair Market valuation. $950,000 $2,100,000 $420,000 $ 80,000 $ 35,000 $3,585,000 Land Building Production equipment Motor vehicles Office equipment Totals Required: Prepare the journal necessary to record these assets, at allocated costs, in the books of City Developers. General Journal Accounts Date Dr. Cr.

Answer 1

Asset	Fair market value	Percentage of fair market value	Allocated cost
Land	950,000	950,000/3,585,000 = 26.49930265%	4,500,000 x 26.49930265% = 1,192,469
Building	2,100,000	2,100,000/3,585,000 = 58.57740586%	4,500,000 x 58.57740586% = 2,635,983
Production equipment	420,000	420,000/3,585,000 = 11.71548117%	4,500,000 x 11.71548117% = 527,197
Motor vehicles	80,000	80,000/3,585,000 = 2.23152022%	4,500,000 x 2.23152022% = 100,418
Office equipment	35,000	35,000/3,585,000 = 0.9762901%	4,500,000 x 0.9762901% = 43,933
Total	$3,585,000	100%	$4,500,000

Journal

6/15/18	Land	1,192,469
	Building	2,635,983
	Production equipment	527,197
	Motor vehicles	100,418
	Office equipment	43,933
	Cash		4,500,000

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