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24 October, 09:06

Rodriguez Company pays $321,165 for real estate with land, land improvements, and a building. Land is appraised at $210,000; land improvements are appraised at $42,000; and a building is appraised at $168,000. Allocate the total cost among the three purchased assets and prepare the journal entry to record the purchase.

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  1. 24 October, 12:26
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    Land $210,000 (debit)

    Land Improvements $42,000 (debit)

    Building $ 168,000 (debit)

    Cash $ 420,000 (credit)

    Explanation:

    Recognise the Assets Purchased separately at their appraised amounts to reflect inflow of economic benefits and de-recognise the Asset Cash to reflect outflow of economic benefits.
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