Ascertain the allocation of property costs to the three assets purchased.

Question

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Answer 1

Question

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000

Table (1)

Hence, the allocation of property costs to the three assets purchased is option b. Land, $163,000; Land Improvements, $65,200; Building, 97,800.

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Answer 2

Question

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000

Table (1)

Hence, the allocation of property costs to the three assets purchased is option b. Land, $163,000; Land Improvements, $65,200; Building, 97,800.

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Answer 3

Question

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000

Table (1)

Hence, the allocation of property costs to the three assets purchased is option b. Land, $163,000; Land Improvements, $65,200; Building, 97,800.

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Answer 4

Question

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000

Table (1)

Hence, the allocation of property costs to the three assets purchased is option b. Land, $163,000; Land Improvements, $65,200; Building, 97,800.

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Answer 5

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000

Table (1)

Hence, the allocation of property costs to the three assets purchased is option b. Land, $163,000; Land Improvements, $65,200; Building, 97,800.

Answer 6

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000

Table (1)

Hence, the allocation of property costs to the three assets purchased is option b. Land, $163,000; Land Improvements, $65,200; Building, 97,800.

Answer 7

Chapter 8, Problem 1MCQ

To determine

Ascertain the allocation of property costs to the three assets purchased.

Answer 8

Expert Solution & Answer

Explanation of Solution

Lump-Sum purchase:

If a company purchases a group of assets collectively and a lump sum amount is paid for such purchase, then it is referred to as basket purchase. The accounting term for this type of acquisition is the lump-sum purchase.

Ascertain the allocation of property costs to the three assets purchased as follows:

Assets	Fair Market Value (in $)	Percent of total=(Market value of specific asset)(Market value of total assets)	Allocation of the purchase price based on the percentage of total($326,000×Specific asset's percentage of total)
Land	175,000	$175,000$350,000 =50%	163,000
Land Improvements	70,000	$70,000$350,000 =20%	65,200
Building	105,000	$105,000$350,000=30%	97,800
Total	$350,000		$326,000