Lump-sum purchases of land and a building are allocated on the basis of the relative fair market values of the individual assets acquired.

Name: Lump-sum purchases of land and a building are allocated on the basis of the relative fair market values of the individual assets acquired.
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Question

Quizplus · Accepted Answer

This statement is true. When making a lump-sum purchase of land and a building, the allocation of the cost between the two assets is based on their relative fair market values. This is known as the cost allocation method.

Lump-Sum Purchases of Land and a Building Are Allocated on the Basis