In a "Basket" or "Lump-Sum" Purchase of Assets,which of the Following

question 9

Multiple Choice

In a "basket" or "lump-sum" purchase of assets,which of the following best describes the process by which the historical cost of the various assets acquired should be determined?

• A) Allocation of the total cost to the individual assets on the basis of the historical cost of the individual assets to their original owner.
• B) Allocation of the total cost to the individual assets on the basis of the fair market value of the individual assets at the time of the "basket" purchase.
• C) Recording of the individual assets at their current value with recognition of a gain or loss for the difference between the price paid for the assets and the current value of the individual assets.
• D) Recording of the individual assets at their original historical cost to the seller with a gain or loss recognized as the difference between the total of the original historical cost figures and the price paid in the basket purchase.

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Definitions:

Identical Net Cash Flow

A situation where the inflows and outflows of cash over a period are exactly the same, leading to no net change in cash position.