Hastings Company has purchased a group of assets for $350,000.The assets and their market values are listed as follows: $$\begin{array} { | l | r | }
\hline \text { Land } & \$ 125,000 \
\hline \text { Equipment } & 75,000 \
\hline \text { Building } & 200,000 \
\hline
\end{array}$$ Which of the following amounts would be debited to the Land account?

Question

Hastings Company has purchased a group of assets for $350,000.The assets and their market values are listed as follows: $$\begin{array} { | l | r | } 
\hline \text { Land } & \$ 125,000 \
\hline \text { Equipment } & 75,000 \
\hline \text { Building } & 200,000 \
\hline
\end{array}$$ Which of the following amounts would be debited to the Land account?

Quizplus · Accepted Answer

The total market value of the assets is $400,000 ($125,000 for land + $75,000 for equipment + $200,000 for building). The purchase price of $350,000 is allocated based on the market values. The land's portion is calculated as ($125,000 / $400,000) * $350,000 = $109,375.

Hastings Company Has Purchased a Group of Assets for $350,000