Chapter 11, Problem 11.3E

a.

To determine

To allocate: Purchase cost to each required asset.

Given information:

Cost of expansion is $5,000,000.

Fair value of building is $3,200,000.

Fair value of land is $1,600,000.

Fair value of Machinery and equipment is $864,000.

Fair value of inventory is $183,500.

Fair value of manufacturing supplies is $52,500.

b.

To determine

To prepare: Journal entry to record the allocated cost of acquisition of the asset.

c.

To determine

To prepare: Journal entry to record the depreciation on building and machinery and equipment, sale of inventory and use of manufacturing supplies.