When land and building are acquired for a lump sum,the purchase amount should be allocated on the basis of the market values of the two assets.

Question

Quizplus · Accepted Answer

Allocating the purchase amount of land and building on the basis of their market values is considered an appropriate method for accounting purposes. This is because the market values of land and building are usually different, and allocating the purchase amount based on their respective market values provides a more accurate representation of the relative values of the assets acquired.

When Land and Building Are Acquired for a Lump Sum,the