Question 5 Bundle purchase of assets

Office Plus Company bought an office building for $9,000,000 so it could consolidate its entire senior management staff in one location. An independent appraiser valued these items individually as follows:

PPE category	Appraised value
Land	$3,000,000
Building	4,000,000
Computer network system	1,200,000
Elevator system	1,800,000
Landscaping and site improvements	800,000
Total	$10,800,000

Prior to completing the purchase, Office Plus' management decided that it will remove the computer network system and replace it with fiber-optic cables and related technologies.

Allocate the purchase price among the assets acquired. (000s)

PPE category	Appraised value	Fraction of total appraised value	Total price	= Allocated price
Land
Building
Computer network system
Elevator system
Landscaping and site improvements
Total

Provide the journal entry to set up the assets purchased

Account/Explanation	Debit	Credit