Kelly Company purchased land, a building, and equipment for $1,200,000 from Bagley Enterprises. The portion of the total cost recorded for the equipment.
- Is equal to the book value of the assets are recorded on Bagley’s books.
- Cannot be determined so the three assets are recorded in one account.
- Is computed by taking the fair value of the equipment divided by the fair value of the three assets and then multiplying that percentage by the total cost of $1,200,00.
- Is reduced by the difference between the fair value of the equipment and Bagley’s cost.
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