Homework Answers
Allocation percentage of purchase of land, a building and equipment
Total fair value of all the assets = Land + building + equipment
Total fair value of all the assets= 218750+1531250+437500= 2187500
Allocation percentage of each assets = fair value of an asset / total fair value of all the assets
Land = 218750/2187500= 10%
Building = 1531250/2187500= 70%
Equipment= 437500/2187500= 20%
When a a company a purchase the assets , record it at purchase in the books of Account.
Land amount = allocation percentage of land × purchase price
Land amount= 10% × 1,750,000= 175,000
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