Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Question
Chapter 9, Problem 9.2SE
To determine
Lump-sum (Group) Purchase of asset: Lump-sum purchase is a method of assignment of the cost of land and other assets. Sometimes, a company may purchase land and other assets in a lump-sum amount. In group purchase method, the lump-sum amount is apportioned between the various components of the lump-sum purchase.
- Lump-sum purchase consists of purchase of other assets with land by paying a lump-sum amount. It is also called basket purchase.
- That lump-sum amount (100%) is apportioned among land and other asset on the basis of their separate prices.
- The separate value of the asset indicates the relative market value of the asset.
To journalize: the lump-sum purchase of the three assets: land, building, and equipment.
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Chapter 9 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
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