Chesapeake Company paid $475,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture - $95,000; Building - $370,000, Land - $66,000. Based on this information the amount of cost that would be allocated to the office furniture is closest to:
A)$95,000.
B)$85,500.
C)$158,333.
D)$52,500.

Question

Quizplus · Accepted Answer

$95,000/($95,000 + $370,000 + $66,000) = 18% of total market value; $475,000 purchase price x 18% = $85,500 cost of furniture

Chesapeake Company Paid $475,000 for a Basket Purchase That Included