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 Land account is debited based on its relative market value proportion of the total market value of all assets. The total market value is $11,000 (Land) + $6,100 (Equipment) + $12,800 (Building) = $29,900. The proportion for Land is $11,000 / $29,900. The amount debited to Land is $16,000 * ($11,000 / $29,900) = $5,886.29.

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