10 June, 08:26

# Ayayai Inc. purchased land, building, and equipment from Laguna Corporation for a cash payment of \$466,200. The estimated fair values of the assets are land \$88,800, building \$325,600, and equipment \$118,400. At what amounts should each of the three assets be recorded

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1. 10 June, 08:43
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The recorded value of land, building, and the equipment is \$77,700, \$284,900, and \$103,600 respectively.

Explanation:

The steps to compute the recorded amount is shown below:

1. First compute the total fair value of the assets:

= land + building + equipment

= \$88,800 + \$325,600 + \$118,400

= \$532,800

2. Now the recorded amount will be equal to

For land = (Fair value of land : total fair value of the assets) * total payment made

= (\$88,800 : \$532,800) * \$466,200

= \$77,700

For building = (Fair value of building : total fair value of the assets) * total payment made

= (\$325,600 : \$532,800) * \$466,200

= \$284,900

For equipment = (Fair value of equipment : total fair value of the assets) * total payment made

= (\$118,400 : \$532,800) * \$466,200

= \$103,600