Ananias Company purchased the assets of Saphira Company at an auction for $5,600,000. An independent appraisal...

Ananias Company purchased the assets of Saphira Company at an auction for $5,600,000. An independent appraisal of the fair value of the assets is listed below:

Land $1,900,000

Building 2,800,000

Equipment 2,100,000

Trucks 3,400,000

Assuming that specific identification costs are impracticable and that Ananias allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Building?

Group of answer choices

$2,118,920

$5,100,000

$2,800,000

$1,537,255

Expert Solution

Allocation of Purchase price on the basis of relative Fair value of the asset
Asset	Fair Value	Allocation of Purchase Price
Land	$ 1,900,000.00	$1,043,137	($56,00,000/$102,00,000*$19,00,000)
Building	$ 2,800,000.00	$1,537,255	($56,00,000/$102,00,000*$28,00,000)
Equipment	$ 2,100,000.00	$1,152,941	($56,00,000/$102,00,000*$21,00,000)
Trucks	$ 3,400,000.00	$1,866,667	($56,00,000/$102,00,000*$34,00,000)
	$ 10,200,000	$ 5,600,000

Purchase price allocated to Building = $15,37,255

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ekkarill92 answered 2 years ago

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