Question

In: Accounting

Chico Company paid $950,000 for a basket purchase that included office furniture, a building and land....

Chico Company paid $950,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture $190,000; Building $740,000, Land $132,000. Based on this information, the amount of cost that would be allocated to the office furniture is closest to: (Round your intermediate percentages to 2 decimal places: ie 0.054231 = 5.42%.):

Solutions

Expert Solution

Particulars Value Percentage
Office Furniture $1,90,000 17.89%
Buildings $7,40,000 69.68%
Land $1,32,000 12.43%
Total $10,62,000 100.00%

Amount to be allocated to Office Furniture in Basket Purchase Price = $950,000 * 17.89% = $ 169,955


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