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Jamison Company purchased the assets of Booker Company at an auction for $1,400,000.An independent appraisal of the fair value of the assets is listed below:
-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 Trucks?

Question

Use the following information to answer questions 
Jamison Company purchased the assets of Booker Company at an auction for $1,400,000.An independent appraisal of the fair value of the assets is listed below: 
-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 Trucks?

Quizplus · Accepted Answer

The allocation is based on the relative fair values. If the total purchase price is allocated proportionally to the fair value of each asset, and the fair value of the trucks is $700,000 out of a total fair value of $1,500,000, the allocation to the trucks would be ($700,000 / $1,500,000) * $1,000,000 = $466,667.

Use the Following Information to Answer Questions