Question - Lump-Sum Purchase of Assets and Subsequent Events
Smith Manufacturing purchased, for cash, three large pieces of equipment. Based on recent sales of similar equipment, the fair market value are as follow:
Piece 1 $200,000
Piece 2 $200,000
Piece 3 $440,000
Required
a. What value is assigned to each piece of equipment if the equipment was purchased for (a) $480,000, and (c) $800,000?
b. How does the purchase of the equipment affect total assets?