Answer:
The total purchase cost for all three assets is $1,800,000.
Explanation:
Ratios based on fair values were:
6: 3: 1 for Office Building $1,200,00 : Land $600,000 : Equipment $200,000. Therefore, office building represents 60%, Land 30%, and Equipment 10% of the cost.
Since the Office building costs $1,080,000, using the above fair values ratio, this cost represents 60% of the total.
Therefore, the total cost will be $1,800,000 ($1,080,000/60 X 100).
The total purchase cost for all three assets is obtained using the proportion method of cost allocation based on the given fair values.
