csht Answer

Running head: ALLOCATIONS 1

ALLOCATIONS 4

Lump sum allocations

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Lump sum allocation to items

It is necessary to allocate the lump sum payments to individual items to account for the share of the total value in the different ledger accounts ("How is the cost of a lump-sum purchase allocated to the individual assets acquired? Provide A..," n.d.) . The price of the $ 1000, 000 will be apportioned to the assets as follows.

Asset	Land	Building	Equipment
Appraised value	400000	500000	300000
Purchase Value	=400000/120000*100000	=500000/120000*100000	=300000/120000*100000
	=333333.333333333	=416666.666666667	=250000

The amount that is indicated in accumulated depreciation account is not used in representing the amount to replace the machinery in case it wears out. However it represents the total extent of the decline in the value of the asset due to wear and tears (Horngren, 2012).

Calculation of Net Pay		$
Gross Pay @ 100 per hour	=40*100	$4,000.00
Add: 5% bonus	=4000*5/100	$200.00
Add: 10% commission	=4000*10/100	$400.00
Total Pay (A)		$4,600.00
Withholding expenses:
Employee’s Income Tax (20%)	=4600*20/100	$920.00
Employee’s OASDI Tax	=4600*6.2/100	$285.20
Employee’s Medical care Tax (1.45%)	=4600*1.45/100	$66.70
Employee’s Healthcare Cover		$75.00
Employee’s Contribution to United Pay		$20.00
Total Withholdings (B)		$1,366.90
Net Pay (A-B)		$3,233.10

References

Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D., & Tan, R. (2012). Financial accounting. Pearson Higher Education AU.

How is the cost of a lump-sum purchase allocated to the individual assets acquired? Provide A.. (n.d.). Homework Help Online - HomeworkLib. https://www.homeworklib.com/questions/1320145/how-is-the-cost-of-a-lump-sum-purchase-allocated