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Chico Company paid $950,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture - $190,000; Building - $740,000, Land - $132,000. Based on this information, and rounding allocations to two decimal places, the amount of cost that would be allocated to the office furniture is closest to _________.

Respuesta :

Answer:

The amount of cost that would be allocated to office furniture is $169,962.34 as shown below.

Explanation:

The amount of cost that would be allocated to office furniture is based on the office furniture's proportion of the total market values,hence the formula for calculating office furniture's cost is:

(furniture market value/total market values)* cash paid

furniture market value=$190000

Total market values =$190000+$740000+$132000

                                  =$1,062,000 .00

Cash paid =$950000

Hence cost of furniture=($190000/$1062000)*$950000

                                       =$169,962.34

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