Crow co. purchased some of the machinery of hare inc., a bankrupt competitor, at a liquidation sale for a total cost of $17,000. crow’s cost of moving and installing the machinery totaled $1,800. the following data are available: item hare’s net book value on the date of sale list price of same item if new appraiser’s estimate of fair value punch press $ 10,140 $ 19,000 $ 15,000 lathe 8,740 9,000 5,000 welder 2,730 6,000 3,060 required: a. calculate the amount that should be recorded by crow co. as the cost of each piece of equipment. (do not round intermediate calculations.)

Punch Press     12,228.97

Lather                 4,076.32

Welder                2,494.71

Explanation:

We use the fair value of the acquired goods and then compare with the cost:

Punch press fair value 15,000

Lather fair value             5,000

Welder fair value           3,060

Total                            23,060

All the Cost incurred to get the equipment read y for use:

17,000 purhcase  + 1,800 installation: 18,800

we now cross multiply for each product:

15,000/23,060 x 18,800  =   12.228,9679

 5,000/23,060 x 18,800  =  4.076,32263

 3,060/23,060 x 18,800  =  2.494,7094

Punch Press     12,228.97 debit

Lather                 4,076.32 debit

Welder                2,494.71 debit

                Cash                 18,800 credit

the answer is a.

by: nicholas dooley