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What value is assigned to each piece of equipment if the

Question - Lump-Sum Purchase of Assets and Subsequent Events

Smith Manufacturing purchased, for cash, three large pieces of equipment. Based on recent sales of similar equipment, the fair market value are as follow:

Piece 1 $200,000

Piece 2 $200,000

Piece 3 $440,000

Required

a. What value is assigned to each piece of equipment if the equipment was purchased for (a) $480,000, and (c) $800,000?

b. How does the purchase of the equipment affect total assets?

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