Simpson and homer corporation acquired an office building on three acres of land for a lump-sum price of $2,400,000. the building was completely furnished. according to independent appraisals, the fair values were $1,300,000, $780,000, and $520,000 for the building, land, and furniture and fixtures, respectively. the initial values of the building, land, and furniture and fixtures in the general ledger would be:

The initial values of the building, land, and furniture and fixtures in the general ledger would be $1,200,000,  $720,000, $480,000 respectively.

Explanation:

For computing the initial values for fixed assets, first we have to take the sum of all three fixed assets amounts, than do the proportion with respect to sum of all three fixed assets and lump sum price by considered each fixed assets fair value.

In mathematically,

Initial Value = (Fair value of fixed asset ÷ total fair value of all three assets) × Lump sum price

So, the total fair value of all three assets = Fair value of building + fair value of land + fair value of furniture and fixtures

= $1,300,000 + $780,000, +$520,000

= $2,600,000

Thus, the the total fair value of all three assets is $2,600,000

Now, apply the above formula to compute each one fair value.

For Building = ($1,300,000 ÷ $2,600,000) × $2,400,000 = $1,200,000

For Land = ($780,000 ÷ $2,600,000) × $2,400,000 = $720,000

For Furniture and Fixtures = ($520,000 ÷ $2,600,000) × $2,400,000 = $480,000

Hence, The initial values of the building, land, and furniture and fixtures in the general ledger would be $1,200,000,  $720,000, $480,000 respectively.

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