During 2011, Ruby Corporation purchased three pieces of equipment at an auction for the lump sum of $200, 000.It cost Ruby $20, 000 to have the equipment delivered and installed.The equipment was appraised at the following values: $\begin{array}{ll}
\text { Machine 1 } & \$ 120,000 \
\text { Machine 2 } & 105,000 \
\text { Machine 3 } & 75,000
\end{array}$
Machine 2 should be recorded on Ruby's books at

Question

During 2011, Ruby Corporation purchased three pieces of equipment at an auction for the lump sum of $200, 000.It cost Ruby $20, 000 to have the equipment delivered and installed.The equipment was appraised at the following values: $\begin{array}{ll}
\text { Machine 1 } & \$ 120,000 \
\text { Machine 2 } & 105,000 \
\text { Machine 3 } & 75,000
\end{array}$
 Machine 2 should be recorded on Ruby's books at

Quizplus · Accepted Answer

The total cost of the equipment is $220,000 ($200,000 purchase price + $20,000 delivery and installation). The total appraised value is $300,000 ($120,000 + $105,000 + $75,000). Machine 2's proportion of the total appraised value is 35% ($105,000 / $300,000). Therefore, Machine 2 should be recorded at 35% of the total cost, which is $77,000 ($220,000 * 35%).

During 2011, Ruby Corporation Purchased Three Pieces of Equipment at an Auction