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Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
Edition 9ISBN: 0073527068Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
Edition 9ISBN: 0073527068 Exercise 7
Step-by-step solution
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Step 1 of 2
a. The cost of the equipment plus the cost of moving and installation are allocated on the basis of the appraiser's estimate of fair value. The list price of the same items if new does not represent the value of the useditems being purchased. Likewise, the net book value of the items on the sellingcompany’s books is not relevant to their value to the purchaser.
| Appraiser's |
|
| Total | Purchase |
| Estimate of | Percent |
| Amount | Price |
| Fair Value | of Total |
| Allocated | Allocation |
Punch press | $24,000 | 60% | * | $36,800 | $22,080 |
Lathe | 12,000 | 30% | * | 36,800 | 11,040 |
Welder | 4,000 | 10% | * | 36,800 | 3,680 |
Total | $40,000 |
|
|
| $36,800 |
Step 2 of 2
Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall
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