During the current year, the Great Drake Company acquired a manufacturing facility at a total acquisition cost of $4,800,000. The acquisition included the factory building, land, and all existing equipment in the facility. The firm estimates the fair value of the assets if acquired separately at a total of $5,500,000 with the fair value of the factory building at $2,695,000, the fair value of the land at $825.000, and the fair value of the equipment at $1,980,000. Determine the capitalized cost of each asset using the relative fair value method and prepare the necessary journal entry to record the acquisition assuming that Great Drake paid cash for the facility. Determine the capitalized cost of each asset using the table below. Assets Type Factory Building Land Equipment Total Fair Value Account Percentage of Total Fair Value 96 96 96 Total Cost of Manufacturing Facility Allocation to Specific Balance Sheet Accounts Now, prepare the necessary journal entry to record the acquisition, assuming that Great Drake paid cash for the facility. (Record debits first, then credits. Exclude explanations from any journal entries.) Current Year

During the current year, the Great Drake Company acquired a manufacturing facility at a total acquisition cost of $4,800,000. The acquisition included the factory building, land, and all existing equipment in the facility. The firm estimates the fair value of the assets if acquired separately at a total of $5,500,000 with the fair value of the factory building at $2,695,000, the fair value of the land at $825.000, and the fair value of the equipment at $1,980,000. Determine the capitalized cost of each asset using the relative fair value method and prepare the necessary journal entry to record the acquisition assuming that Great Drake paid cash for the facility. Determine the capitalized cost of each asset using the table below. Assets Type Factory Building Land Equipment Total Fair Value Account Percentage of Total Fair Value 96 96 96 Total Cost of Manufacturing Facility Allocation to Specific Balance Sheet Accounts Now, prepare the necessary journal entry to record the acquisition, assuming that Great Drake paid cash for the facility. (Record debits first, then credits. Exclude explanations from any journal entries.) Current Year

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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