E9-14 Lump-sum purchase of assets
Deadwood Properties bought three lots in a subdivision
for a lump-sum price. An independent appraiser valued the lots as follows:
|
Lot
|
Appraised Value
|
|
1
|
$70,500
|
|
2
|
235,000
|
|
3
|
164,500
|
Deadwood paid $210,000 in cash.
Requirement
1. Record the purchase in the journal, identifying
each lot’s cost in a separate Land account. Round decimals to two places, and
use your computed percentages throughout.
TUTORIAL PREVIEW
Allocation of cost to each lot:
|
Lot
|
Appraised
Value
|
Percentage of Total
Value
|
|
|
x
Price
|
=
|
Total
Purchase
Allocated Cost
|
|
1
|
$ 70,500
|
$70,500 / $470,000
|
=
|
15%
|
×
$210,000
|
=
|
$
31,500
|
File name: E9-14 Lump-sum purchase.xlsx File type: xlsx PRICE:$6
