Question

Help Sure & Submit Check my work Exercise 10-3 Lump-sum purchase of plant assets LO C1 8 0250:00 Rodriguez Company pays $395,330 for real estate with land, land improvements, and a building Land is appraised at $157,040, land improvements are appraised at $58.890, and a building is appraised at $176,670 Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase Complete this question by entering your answers in the tabs below. Required 1 Required 2 Allocate the total cost among the three assets. Appraised Percent of Total Appraised Value Total Cost of Acquisition Apportioned Cost Land Land improvements Building Required 2 >

Answer 1

1.

	Apprised Value	Percent of Total Apprised Value	× Total Cost of Acquisition	= Apportioned Cost
Land	$ 157,040	40%	$ 395,380	$ 158,152
Land Improvement	$58,890	15 %	$395,380	$ 59,307
Building	$176,670	45 %	$ 395,380	$ 177,921
Total	$392,600	100 %		$ 395,380

Working Note ;

Allocation of Total Cost

Land = $ 395,380 * 40 % = $ 158,152

Land Improvement = $ 395,380 * 15 % = $59,307

Building = $395,380 * 45 % = $177,921

2) Prepare the Journal entry to record purchase.

  

Sl.No	Account Title and Explanation	Debit	Credi
1	Land	$ 158,152
	Land Improvement	$ 59,307
	Building	$ 177,921
	Cash		$ 395,380