Items of property, plant and equipment may be acquired for a lump-sum without identification of the cost of each asset. The total cost must be allocated to the individual assets on the basis of:

Question

Quizplus · Accepted Answer

Allocating the cost based on fair value at the date of acquisition ensures that the cost is assigned to each asset accurately and fairly. It also reflects the current market conditions and recognizes any changes in the value of the assets. Independent valuation, market value, and replacement value may not accurately reflect the fair value of the assets at the date of acquisition.

Items of Property, Plant and Equipment May Be Acquired for a Lump-Sum