eBook work (Application) Print Item Lump-Sum Purchase of Assets and subsequent Events Dixon Manufacturing purchased, for cash, three large pieces of equipment. Based on recent sales of similar equipment, the fair market values are as follows: Piece 1 $200,000 Piece 2 $200,000 Piece 3 $440,000 Required: 1. What value is assigned to each piece of equipment if the equipment was purchased for (a) $480,000, (b) $680,000, and (c) $800,000? Hint: First determine the percentage of the cost of each of the pieces of equipment to the total cost of all three pieces, rounded to one decimal place. If necessary, round any allocation calculations to the nearest dollar. Total Purchase Price Piece 1: Cost Assigned Piece 2: Cost Assigned Piece 3: Cost Assigned Scenario a. $480,000 $ 114,286 x 200,000 X $ 440,000 X b. $680,000 161,905 x 161,905 X $365,190 X 190,476 X 190,476 X C. $800,000 $ 419,048 x 2. How does the purchase of the equipment affect total assets? of the assets. The purchase does not change V total assets; it affects only the composition Feedback Check My Work Determine the entire market value of the assets acquired. Purchase price should be allocated to each asset based on the proportionate market values of each asset. Think about the implications when lump-sum purchases involve both depreciable and non-depreciable assets. Consider the accounts used and net changes in assets. Consider the value assigned to assets affecting the balance sheet and gains/losses when sold. Previous Next