Lump-Sum Purchase

Acquisition of two or more assets for one price. The acquisition price is allocated to the assets based on their relative fair market values. For example, land and a building having separate fair market values of $30,000 and $70,000 are purchased for the lump-sum price of $90,000.

Acquisition of a group of assets for a single price. The cost should be allocated to the assets based on their fair market values. Assume $75,000 is paid to acquire land, building, and equipment having the fair market values of $40,000, $25,000, and $35,000, respectively. The allocated cost is shown below: