Cranberry Company purchased two pieces of equipment from a Canadian vendor for $400,000.If the assets had been purchased separately,the company would have paid $90,000 for the first piece of equipment and $360,000 for the second piece of equipment.What amount should be recorded for the FIRST piece of equipment?

Question

Quizplus · Accepted Answer

The total purchase price of $400,000 is allocated based on the relative fair values of the two pieces of equipment. The first piece's fair value is $90,000, and the second piece's fair value is $360,000, totaling $450,000. The first piece's allocated cost is ($90,000 / $450,000) * $400,000 = $80,000.

Cranberry Company Purchased Two Pieces of Equipment from a Canadian