A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000.
-The above transaction may be referred to as a
A) fair value purchase.
B) long-lived asset purchase.
C) property purchase.
D) basket purchase.

Question

Quizplus · Accepted Answer

The transaction is referred to as a basket purchase because multiple assets (land, building, equipment) are acquired together for a single purchase price, requiring the allocation of the total cost among the individual assets based on their relative fair values.

A Company Purchased Property for $300,000