Question

qs 10-3 (algo) lump - sum purchase of assets lo c1
diego company paid $181,000 cash to acquire a group of items consisting of land appraised at $40,400 and a building appraised at $161,600. allocate total cost to these two assets and prepare an entry to record the purchase.
complete this question by entering your answers in the tabs below.
total cost general journal
allocate total cost to these two assets.
asset percent of total apportioned cost
land
building
totals

Explanation:

Step1: Calculate total appraised value

$40400 + 161600=202000$

Step2: Calculate percentage of land

$\frac{40400}{202000}\times100 = 20\%$

Step3: Calculate percentage of building

$\frac{161600}{202000}\times100 = 80\%$

Step4: Allocate cost to land

$181000\times20\%=36200$

Step5: Allocate cost to building

$181000\times80\% = 144800$

Answer:

Asset	Percent of Total	Apportioned Cost
Building	80%	$144800
Totals	100%	$181000

Journal entry:
Debit: Land $36200
Debit: Building $144800
Credit: Cash $181000