Answer:
Initial value of building = $4,050,000
Initial value of land = $2,700,000
Initial value of equipment = $2,250,000
Explanation:
The fair value of an asset refers to a unbiased estimate of the likely market price of the asset.
The initial value of a fixed asset refers to the amount of money that spent to acquire or create the asset.
The initial value of each asset from a group of asset can be calculated using the following formula:
Initial value of an asset = Lump-sum price * (FVA / TFV) ............ (1)
Where, from the questio;
Lump-sum price = $9,000,000
FVA = Fair value of a particular asset. From the question, we have:
Building fair value = $4,500,000
Land fair value = $3,000,000
Land fair value = $2,500,000
TFV =Total fair value = Building fair value + Land fair value + Land fair value = $4,500,000 + $3,000,000 + $2,500,000 = $10,000,000
Substituting the values into equation (1), we can determine the initial value of each asset as follows:
Initial value of building = $9,000,000 * ($4,500,000 / $10,000,000) = $9,000,000 * 0.45 = $4,050,000
Initial value of land = $9,000,000 * ($3,000,000 / $10,000,000) = $9,000,000 * 0.30 = $2,700,000
Initial value of equipment = $9,000,000 * ($2,500,000 / $10,000,000) = $9,000,000 * 0.25 = $2,250,000
