Jackson Limited acquired a bundle of assets for a cash consideration of $200 000. The fair values of the assets on date of acquisition was as follows: building $132 000, furniture $88 000. The appropriate journal entry to record this acquisition is:

Question

Quizplus · Accepted Answer

The assets should be recorded at their proportionate fair values relative to the total consideration paid. The total fair value is $220,000, but the consideration paid is $200,000, so the building and furniture are recorded at $120,000 and $80,000, respectively, to reflect the proportionate allocation of the purchase price.

Jackson Limited Acquired a Bundle of Assets for a Cash