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natita [175]
3 years ago
14

Red Rock Bakery purchases land, building, and equipment for a single purchase price of $200,000. However, the estimated fair val

ues of the land, building, and equipment are $105,000, $180,000, and $15,000, respectively, for a total estimated fair value of $300,000.
Business
1 answer:
svetoff [14.1K]3 years ago
7 0

Answer:

The amounts to be recorded land, building, and equipment are $70,000, $120,000, and $10,000, respectively.

Explanation:

Purchase price of land, building, and equipment = $200,000

Estimated fair values of;

Land = $105,000

Building = $180,000

Equipment = $15,000

Total estimated fair value = $300,000

Amount to be recorded in the books of Red Rock Bakery for;

Land = ($105,000/$300,000) × $200,000

        = $70,000

Building = ($180,000/$300,000) × $200,000

        = $120,000

Equipment = ($15,000/$300,000) × $200,000

        = $10,000

The amounts to be recorded land, building, and equipment are $70,000, $120,000, and $10,000, respectively.

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