Items of property, plant and equipment may be acquired for a lump-sum without identification of the cost of each asset. The total cost must be allocated to the individual assets based on:

Question

Quizplus · Accepted Answer

The fair value at the date of acquisition is the most appropriate basis for allocating the lump-sum cost to individual assets. It reflects the actual cost of acquiring each asset at the time of purchase, rather than relying on less reliable measures such as replacement value or market value. Independent valuation may also be used, but it is not necessarily required if the fair value can be reliably determined.

Items of Property, Plant and Equipment May Be Acquired for a Lump-Sum