Question

PNW, LLC purchased equipment, a building, and land for one price of $6,050,500. The estimated fair values of the equipment, building, and land are $1,000,000, $7,000,000, and $2,000,000, respectively. At what amount would the company record the building?

Answer 1

Answer:

$4235350.

Explanation:

Given: Estimated fair value of the equipment= $1000000.

           Estimated fair value of the building=     $7000000.

           Estimated fair value of the land=           $2000000.

           One Purchase price of equipment, building and land= $6050500.

First finding the allocated percentage share of building.

Total amount shared by building, land and equipments= $\ 1000000+\ 7000000+\ 2000000$

∴ Total amount shared by building, land and equipments= $\ 10000000$

Allocated percentage share of building= $\frac{Estimated\ fair\ price\ of\ building}{Total\ amount\ shared} \times 100$

⇒ Allocated percentage share of building= $\frac{7000000}{10000000}\times 100$

∴ Allocated percentage share of building= $70\%$

Now, calculating amount would the company record the building.

Amount recorded for the building= $70\% \times \ 6050500$

⇒ Amount recorded for the building= $\frac{70}{100} \times 6050500$

∴ Amount recorded for the building= $\ 4235350$.

Hence, amount that company would record for building is $4235350.