Answered

Discover how IDNLearn.com can help you learn and grow with its extensive Q&A platform. Join our knowledgeable community and access a wealth of reliable answers to your most pressing questions.

Exercise 8-3 Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $394,875 for real estate with land, land improvements, and a building. Land is appraised at $202,500; land improvements are appraised at $45,000; and a building is appraised at $202,500. Required: 1. Allocate the total cost among the three assets. 2. Prepare the journal entry to record the purchase.

Sagot :

Zvikoidn

Answer:

Part 1

Land = $176,712

Land Improvements  = $29,269

Building = $176,712

Part 2

Debit :  Land $176,712

Debit :  Land Improvements  $29,269

Debit : Building  $176,712

Credit : Cash  $394,875

Explanation:

Cost allocations based on appraised values

Land = $202,500 / $452,500 x $394,875  = $176,712

Land Improvements = $45,000 / $452,500 x $394,875 = $29,269

Building = $202,500 / $452,500 x $394,875 = $176,712

Journal :

Debit the Assets with their allocated costs and credit cash

Your presence in our community is highly appreciated. Keep sharing your insights and solutions. Together, we can build a rich and valuable knowledge resource for everyone. Find clear answers at IDNLearn.com. Thanks for stopping by, and come back for more reliable solutions.