Deena Ltd. purchased a factory that consists of land, building, and machinery financed through long-term debt as

follows:

Required:

1. Calculate the total cost to be recorded for the land, building, and machinery. (26 marks)

2. Explain the rationale for the allocation basis used. (4 marks)

Date of Purchase Carrying Amount-Seller Purchase Price Real Estate Commission Fees Legal Fees January 31, 2022 $ 2,700,000 $ 4,500,000 $ 225,000 $ 75,000 $ Carrying Amount-Seller Appraisal Value Renovation Costs Land 1,242,000 $ 30% $ Building 810,000 $ 45% 240,000 $ Machinery 648,000 25% 60,000 $ Daten