Question

Homework: HW #7 Say Score: 0 of 1 pt 1 of 8 (0 complete) HW Score: 0%, 0 of 10 p S7-2 (similar to) Question Help Solar Energy Consulting pays $310,000 for a group purchase of land, building, and equipment. At the time of acquisition, the land has a current market value of 5170,000, the building's current market value is $34,000, and the equipment's current market value is $136,000. Prepare a schedule allocating the purchase price of $310,000 to each of the individual assets purchased based on their relative market values, then journalize the lump sum purchase of the three assets. The business signs a note payable for the purchase price Prepare a schedule allocating the purchase price of $310,000 to each of the individual assets purchased based on their relative market values, then journalize the lump-sum purchase of the three assets. The business signs a note payable for the purchase price Begin by preparing a schedule allocating the purchase price of $310.000 Enter any number in the edit fields and then click Check Answer Check Answer Clear All 1 part remaining

Answer 1

Solution

Solar Energy Consulting

Lump-sum paid for the purchase of land, building and equipment = $310,000

Schedule to show allocation of the purchase price based on the relative market values:

Market (Sales) Asset Value Land $170,000 Building $34,000 Equipment $136,000 Total $340,000 Percentage of total market Cost of value Each Asset 50% $155,000 10% $31,000 40% $124,000 100% $310,000

Computations -

Percentages are computed as follows,

Land = 170,000/340,000 = 50%

Building = 34,000/340,000 = 10%

Equipment = 136,000/340,000 = 40%

Cost is allocated to each asset as follows,

Land = 50% x 310,000 = 155,000

Building = 10% x 310,000 = 31,000

Equipment = 40% x 310,000 = 124,000

Journal entry to record the purchase –