When plant assets are purchased in a group,each asset increases 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, their total cost is allocated among the assets based on their relative fair market values, but the individual assets do not directly increase the plant asset account by their fair market value at the time of acquisition. The allocation is based on their proportionate values, not a direct increase by the fair market value.

When Plant Assets Are Purchased in a Group,each Asset Increases