When plant assets are purchased in a group, each asset is debited to the respective plant asset account for its fair market value at the time of acquisition.

Question

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When plant assets are purchased in a group, the total cost is allocated among the assets based on their relative fair market values, but the individual assets are not directly debited for their fair market values at the time of acquisition. The allocation is based on their proportionate values, not the exact fair market value amounts.

When Plant Assets Are Purchased in a Group, Each Asset