Use the following information to answer questions 97 & 98.
Jamison Company purchased the assets of Booker Company at an auction for $4,200,000. An independent appraisal of the fair value of the assets is listed below:
Land .........$1,425,000
Building .....2,100,000
Equipment ...1,575,000
Trucks ..........2,550,000
-Assuming that specific identification costs are impracticable and that Jamison allocates the purchase price on the basis of the relative fair values, what amount would be allocated to the Building?

Question

Quizplus · Accepted Answer

The total fair value of the assets is $7,650,000 ($1,425,000 + $2,100,000 + $1,575,000 + $2,550,000). The purchase price of $4,200,000 is allocated based on the relative fair value of each asset. The building's fair value is $2,100,000, which is 27.45% (2,100,000 / 7,650,000) of the total fair value. Therefore, 27.45% of the purchase price, or $1,152,941 (27.45% of $4,200,000), is allocated to the building.

Use the Following Information to Answer Questions 97 & 98