The Three Little Pigs purchased three houses for a total cost of $160,000. Appraisal values for the three completed houses were: straw house, $40,000; wood house $60,000; and brick house $100,000. Using the basket purchase allocation, the recorded value of the brick house should be ______.

Question

contestada

Respuesta :

ACCESS MORE ACCESS MORE ACCESS MORE ACCESS MORE

abiolataiwo2015 abiolataiwo2015 · Answer 1 · 2021-11-22T11:53:46+01:00

Using the basket purchase allocation, the recorded value of the brick house should be $80,000.

First step is to calculate the allocation percentage

Straw house Wood house Brick house Total

Fair market value $40,000 $60,000 $100,000 $200,000

Percentage 20% 30% 50%

($40,000/$200,000) ($60,000/$200,000) ($40,000/$200,000)

Second step is to allocate using basket purchase allocation

Straw house=20%×$160,000

Straw house=$32,000

Wood house= 30%×$160,000

Wood house=$48,000

Brick house=50%×$160,000

Brick house=$80,000

Inconclusion the recorded value of the brick house should be $80,000.

Learn more here:

https://brainly.com/question/23013112