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…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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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