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18 May, 16:14

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. 18 May, 18:09
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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
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