Exercise 8-3 Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $345

Question

Exercise 8-3 Lump-sum purchase of plant assets LO C1 Rodriguez Company pays $345,000 for real estate plus $18,285 in closing costs. The real estate consists of land appraised at $184,500; land improvements appraised at $61,500; and a building appraised at $164,000 Required: 1. Allocate the total cost among the three purchased assets 2. Prepare the journal entry to record the purchase Complete this question by entering your answers in the tabs below. Required 1 Required 2 Allocate the total cost among the three purchased assets. (Round your "Apportioned Cost" answers to 2 decimal places.) Percent of Tota Appraised Value x Total Cost of Apportioned Appraised Value Acquisition Cost Land Land improvements Building Totals $ 184,500 61,500 164,000 $ 410,000 0% 0.00

Explanation / Answer

1.note: total cost to be allocated = $345,000 +$18,285 for closing cost

=>$363,285.

allocation of total cost among the three purchased assets.

note: apportioned cost = percent of total appraised cost *total cost of acquisition

required 2:

journal entry to record lumpsum purchase:

appraised value percent of total appraised value *total cost of acquisition = apportioned cost land 184,500 (184,500/410,000)=>45% 363,285 163,478.25 land improvements 61,500 (61,500/410,000)=>15% 363,285 54,492.75 building 164,000 (164,000/410,000)=>40% 363,285 145,314 totals 410,000 100% 363,285 363,285

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