Question

1.A company acquired an office building on three acres of land for a lump-sum price of $2,900,000. The building was completely equipped. According to independent appraisals, the fair values were $1,840,000, $1,380,000, and $1,380,000 for the building, land, and equipment, respectively. At what amount would the company record the building?

• $1,860,000.

• None of these answer choices are correct.

• $1,160,000.

• $1,320,000.

2. A company purchased new equipment for $61,000. The company paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $1,050; sales tax paid $3,200; and installation cost, $2,600. The cost recorded for the equipment was:

• $65,250.

• $67,850.

• $62,050.

• $61,000.

3. Alamos Co. exchanged equipment and $17,300 cash for similar equipment. The book value and the fair value of the old equipment were $81,000 and $91,300, respectively.

Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:

• $(10,300).

• $27,600.

• $10,300.

• $0.

4. A company purchased land, a building, and equipment for one price of $1,550,000. The estimated fair values of the land, building, and equipment are $193,750, $1,356,250, and $387,500, respectively. At what amount would the company record the land?

• $193,750

• $155,000

• $1,550,000

• $165,000

Answer 1

Solution to the QUESTION-1

The amount to be recorded for the Building

The amount to be recorded for the Building is calculated by multiplying the total lump-sum price paid with the proportionate percentage of the fair value of the building over the total fair value which is calculated as follows

The amount to be recorded for the Building = Lump-sum price x [Fair value of the building / Total fair value]

= $2,900,000 x [$1,840,000 / ($1,840,000 + $1,380,000 + $1,380,000)]

= $2,900,000 x [$1,840,000 / $4,600,000]

= $1,160,000

“Therefore, the Building should be recorded at $1,160,000. Hence the answer is $1,160,000”

NOTE (More than 1 Question)

Hiii, as per the CHEGG guidelines & policy, the experts are advised to answer the first question only when multiple questions were asked. Here, the multiple questions have asked in the single post and therefore, only the first question have been answered as per the CHEGG guidelines.

Can you please ask the remaining questions separately. Thank You..!!