Hastings Company has purchased a group of assets for $16,000.The assets and their relative market values are listed below. $$\begin{array} { | l | l | }
\hline \text { Land } & \$ 11,000 \
\hline \text { Equipment } & 6100 \
\hline \text { Building } & 12,800 \
\hline
\end{array}$$ Which of the following amounts would be debited to the Land account?

Question

Hastings Company has purchased a group of assets for $16,000.The assets and their relative market values are listed below. $$\begin{array} { | l | l | } 
\hline \text { Land } & \$ 11,000 \
\hline \text { Equipment } & 6100 \
\hline \text { Building } & 12,800 \
\hline
\end{array}$$ Which of the following amounts would be debited to the Land account?

Quizplus · Accepted Answer

The amount debited to the Land account is calculated by finding the proportion of the total market value that the land represents and applying that proportion to the purchase price. The total market value is $29,900 ($11,000 + $6,100 + $12,800). The proportion for land is $11,000 / $29,900. Multiply this by the purchase price of $16,000 to get $5,886.29.

Hastings Company Has Purchased a Group of Assets for $16,000