Question

Allocation of Package Purchase Price Joe Comey went into business by purchasing a car lubrication station consisting of land, a building, and equipment. The seller's original asking price was $240,000. Comey hired an appraiser for $3,000 to appraise the assets. The appraised valuations were: Property Assessed Value $43,000 Land Building 95,000 Equipment 62,000 $200,000 Total After receiving the appraisal, Comey offered $183,000 for the business. The seller refused this offer. Comey then offered $190,000 for the business, which the seller accepted. Using the appraisal values as a guide, allocate the total purchase price of the car lubrication station to the Land, Building, and Equipment accounts. Allocation of Purchase Price Asset $ Land Building Equipment $ Total

Answer 1

Transaction price to be allocated	193000	=190000+3000
Asset	Allocation of Purchase price
Land	41495	=193000*43000/200000
Building	91675	=193000*95000/200000
Equipment	59830	=193000*62000/200000
Total	193000