Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $315,000. The estimated fair values of the assets are land $60,000, building $220,000, and equipment $80,000. At what amounts should each of the three assets be recorded? (Round final answer to 0 deciaml places, e. g. 5,275.)

Recorder Amount

Land

Building

Equipment

Question

Mallory

Business

19 August, 05:26

Mohave Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of $315,000. The estimated fair values of the assets are land $60,000, building $220,000, and equipment $80,000. At what amounts should each of the three assets be recorded? (Round final answer to 0 deciaml places, e. g. 5,275.)

Recorder Amount

Land

Building

Equipment

+2

Answers (1)

Know the Answer?

Jayson Fowler · Answer 1

Recorder Amount: 315000

Land: 52500

Building: 192500

Equipment: 70000

Explanation:

Record the value with the lower of cost or fair value. Since the cost (cash price) is lower. We calculate the proportion of each asset using the fair value figures:

formula: percentage of each asset as a function of fair value multiplied by cash payment.

Total: 60000+220000+80000=360000

land=0.167 (that is 60/360) * 315000 = 52500

Building=0.611 * 315000 = 192500

Equipment = 0.22*315000=70000