When plant assets are purchased as a group in a single transaction for a lump-sum price, the cost of the purchase is allocated among the different types of assets acquired based on their relative market values.

true or false

Question

Business

Blossom

21 February, 06:54

When plant assets are purchased as a group in a single transaction for a lump-sum price, the cost of the purchase is allocated among the different types of assets acquired based on their relative market values.

true or false

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Answers (1)

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Susan Stewart · Answer 1

Statement is true

Explanation:

Sometimes several fixed assets are purchased together for a lump sum price. Single amount is paid for different classes of assets. In this case, these assets are recorded differently under fixed asset section in the balance sheet. Each asset is allocated cost based on their fair market value or market price.

This situation arises when a particular land is purchased along with adjacent structures. Single amount is paid for this transaction.

When plant assets are purchased as a group in a single transaction for a lump-sum price, the cost of the purchase is allocated among the different types of assets acquired based on their relative market values.true or false

When plant assets are purchased as a group in a single transaction for a lump-sum price, the cost of the purchase is allocated among the different types of assets acquired based on their relative market values.

true or false