Allocation of Package Purchase Price
Tamock Company purchased a plant from one of its suppliers. The $995,000 purchase price included the land, a building, and factory machinery. Tamock also paid $5,000 in legal fees to negotiate the purchase of the plant. An appraisal showed the following values for the items purchased:
| Property | Assessed Value |
|---|---|
| Land | $126,000 |
| Building | 486,000 |
| Machinery | 288,000 |
| Total | $900,000 |
Using the assessed value as a guide, allocate the total purchase price of the plant to the land, building, and machinery accounts in Tamock Company’s records.
| Asset | Allocation of Purchase Price |
|---|---|
| Land | $ |
| Building | |
| Machinery | |
| Total | $ |
