Cassidy Inc. acquired land, buildings, and equipment from a bankrupt competitor at a lump-sum price of $216,000. An appraisal shows the following fair values: Land: $60,000 Buildings: $132,000 Equipment: $48,000 How should Cassidy allocate the purchase price to the land, buildings, and equipment, respectively? Question 12 options: $72,000; $72,000; $72,000 $66,667; $120,000; $53,333 $60,000; $132,000; $48,000 $54,000; $118,800; $43,200
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Cassidy Inc. acquired land, buildings, and equipment from a bankrupt competitor at a lump-sum price of $216,000. An appraisal shows the following fair values:
Land: $60,000
Buildings: $132,000
Equipment: $48,000
How should Cassidy allocate the purchase price to the land, buildings, and equipment, respectively?
Question 12 options:
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$72,000; $72,000; $72,000 |
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$66,667; $120,000; $53,333 |
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$60,000; $132,000; $48,000 |
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$54,000; $118,800; $43,200 |
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