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Content type
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Subject
Accounting
Type
Homework
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Running head: LIABILITES
Liabilities
Name
Intitution
Course
Date

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LIABILITIES
Acquisition cost $550,000
Appraisal 50,000
Total cost $600,000
Appraisal
Values % of Total
Land $180,000 28.13%
Building 285,000 44.53%
Equipment 175,000 27.34%
Total value $640,000 100%
Cost assigned to:
Land 28.13% x $600,000 =$ 168,750
Building 44.53% x $600,000 = 267,188
Equipment 27.34% x $600,000 = 164,062
Total cost assigned $600,000
The journal entry will be recorded as below;

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Running head: LIABILITES Liabilities Name Intitution Course Date LIABILITIES Acquisition cost $550,000 Appraisal 50,000 Total cost $600,000 Appraisal Values Land % of Total $180,000 28.13% Building 285,000 44.53% Equipment 175,000 27.34% Total value $640,000 100% Cost assigned to: Land 28.13% x $600,000 Building 44.53% x $600,000 Equipment 27.34% x $600,000 Total cost assigned The journal entry will be recorded as below; =$ 168,750 = 267,188 = 164,062 $600,000 LIABILITIES Item Land Building Equipment Cash Debit $ 168,750 $ 267,188 $ 164,063 Credit $ 600,000 The necessity of allocating lump-sum aount; This is so fixed assets including machinery, land, and equipment are inseparable and attached and as such they are individually stated at a fair proportion of the amount of lump-sum (Stanko & Zeller, 2010). Characteristics of CapEx include: ▪ They should be tangible, ▪ held for administrative, supply or production or for rental purpose, and ▪ Have a useful estimated life of more than one year. Advantages of CapEx and historical costs The advantages are as follows; stating capital expenditures at their historical costs allows for verifica ...
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