Question

Exercise 8-3 Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $347,490 for real estate with land, land improvements, and a building. Land is appraised at S168,000, land improvements are appraised at $84,000, and a building is appraised at $168,000. 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. (Round your "Apportioned Cost answers to 2 decimal places.) Appraised Percent of Total Appraised Value Total cost of Acquisition Apportioned Cost Land Improvements Huling

Answer 1

Ans 1 Apportioned Cost The purchase price paid will be allocated among the assets based on the ratio of their market value Total Cost of Allocation of Total Cost Appraised Value %age Total Appraised Value Acquisition land $168,000 40.00% ($168000 / $420000] $347,490 land improvements $84,000 20.00% ($84000 / $420000] $347,490 Building $168,000 40.00% ($168000 / $420000] $347,490 Total $420,000 1.00 $138,996.00 [$347490 x 40%] $69,498.00 [$347490 x 20%] $138,996.00 [$347490 x 40%] $347,490 Ans 2 Credit Account Title Land Land Improvements Building Cash (To record asset purchase) Debit $138,996.00 $69,498.00 $138,996.00 $347,490.00