Question

Rodriguez Company pays $360,000 for real estate plus $19,080 in closing costs. The real estate consists of land appraised at $200,000; land improvements appraised at $100,000; and a building appraised at $200,000.

Required:
1. Allocate the total cost among the three purchased assets.
2. Prepare the journal entry to record the purchase

Allocate the total cost among the three purchased assets. (Round your "Apportioned Cost" answers to 2 decimal places.) Appraised Value Percent of Total Appraised Value x Total Cost of Acquisition = Apportioned Cost Land Land improvements Building Totals 0% 0.00

Answer 1

Answer
				Amount in $
	Appraised value	% of total apprised value	*Total cost of acquisition	Apportioned cost
Land	$            200,000	40%	$      379,080	$     151,632
Land improvements	$            100,000	20%	$      379,080	$       75,816
Building	$            200,000	40%	$      379,080	$     151,632
Totals	$            500,000	100%		$     379,080
*Total cost of acquisition = Purchase price (360000) + Closing cost (19080)

Explantion	Debit $	Credit $
Land	$            151,632
Land improvements	$              75,816
Building	$            151,632
Cash		$        379,080
( To record purchase of Fixed asset on allocation of cost basis