Greer Manufacturing purchases property that includes land, buildings and equipment for $5.3 million. The company pays $183,000 in legal fees, $215,000 in commissions, and $117,000 in appraisal fees. The land is estimated at 28%, the buildings are at 40%, and the equipment at 32% of the property value.Required:Determine the total acquisition cost of this "basket purchase".Allocate the total acquisition cost to the individual assets acquired.Prepare the journal entry to record the purchase assuming that the company paid 40% of the amounts using cash and signed a note (due in five years) for the remainder.

Solution:- 1)Determination the total acquisition cost of this "basket purchase" as follows:-

Answered: Greer Manufacturing purchases property…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...

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Greer Manufacturing purchases property that includes land, buildings and equipment for $5.3 million. The company pays $183,000 in legal fees, $215,000 in commissions, and $117,000 in appraisal fees. The land is estimated at 28%, the buildings are at 40%, and the equipment at 32% of the property value.

Required:

Determine the total acquisition cost of this "basket purchase".
Allocate the total acquisition cost to the individual assets acquired.
Prepare the journal entry to record the purchase assuming that the company paid 40% of the amounts using cash and signed a note (due in five years) for the remainder.

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