Exercise 7-3 (Algo) Allocate costs in a basket purchase (LO7-1) Cold Stone Bakery purchases land, building, and equipment for a single purchase price of $360,000. However, the estimated fair values of the land, building, and equipment are $115,000, $253,000, and $92,000, respectively, for a total estimated fair value of $460,000. Required: Determine the amounts Cold Stone should record in the separate accounts for the land, the building, and the equipment. Land Building Equipment Total Estimated Fair Value $ Allocation Percentage % % % Amount of Basket Purchase Recorded Amount $ 0

Exercise 7-3 (Algo) Allocate costs in a basket purchase (LO7-1) Cold Stone Bakery purchases land, building, and equipment for a single purchase price of $360,000. However, the estimated fair values of the land, building, and equipment are $115,000, $253,000, and $92,000, respectively, for a total estimated fair value of $460,000. Required: Determine the amounts Cold Stone should record in the separate accounts for the land, the building, and the equipment. Land Building Equipment Total Estimated Fair Value $ Allocation Percentage % % % Amount of Basket Purchase Recorded Amount $ 0

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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Exercise 7-3A Allocate costs in a basket purchase (LO7-1) Red Rock Bakery purchases land, building, and equipment for a single purchase price of $500,000. However, the estimated fair values of the land, building, and equipment are $210,000, $330,000, and $60,000, respectively, for a total estimated fair value of $600,000. Required: Determine the amounts Red Rock should record in the separate accounts for the land, the building, and the equipment. X Answer is complete but not entirely correct. Estimated Fair Allocation Amount of Basket Recorded Value Percentage Purchase Amount Land $ 210,000 25 X % $ 500,000 $ 125,000 Building 330,000 65 X % 500,000 325,000 X Equipment 60,000 15 % 500,000 75,000 Total $ 600,000 $ 525,000
Cost ConceptT On February 3, Gallatin Repair Service extended an offer of $152,000 for land that had been priced for sale at $173,000. On February 28, Gallatin Repair Service accepted the seller's counteroffer of $165,000. On October 23, the land was assessed at a value of $248,000 for property tax purposes. On January 15 of the next year, Gallatin Repair Service was offered $264,000 for the land by a national retail chain. At what value should the land be recorded in Gallatin Repair Service's records?
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Chico Company paid $600,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture, $160,000; Building, $500,000; and Land, $130,000. Based on this information, what is the cost that should be allocated to the office furniture? Note: Round intermediate percentage values to a whole percentage. Multiple Choice $235,562 $66,500 $160,000 $120,000
Exercise 13-29 (Algorithmic) (10.3) Sebastian purchases two pieces of equipment for $147,000. Appraisals of the equipment indicate that the fair market value of the first piece of equipment is $102,900 and that of the second piece of equipment is $161,700. What is Sebastian's basis in these two assets? If required, round your interim calculations to two decimal places. Use rounded amounts in subsequent computations. If required, round final answers to the nearest dollar. Sebastian's basis for the first piece of equipment is X and I X for the second piece of equipment.
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