D is corrent. The total cost to be allocated among the three machines is the cost to acquire ($240,000) and to prepare for use ($12,000), a total of $252,000. $300,000 is the total appraised value of the three machines. This total cost is allocated on the basis of relative appraised value. | Machine | | | | | | | A | ($ 50,000/$300,000) | × | ($252,000) | = | $ 42,000 | | B | ($150,000/$300,000) | × | ($252,000) | = | $126,000 | | C | ($100,000/$300,000) | × | ($252,000) | = | $ 84,000 |
A is incorrect. The total cost to be allocated among the three machines is the cost to acquire ($240,000) and to prepare for use ($12,000), a total of $252,000. $300,000 is the total appraised value of the three machines. This total cost is allocated on the basis of relative appraised value. | Machine | | | | | | | A | ($ 50,000/$300,000) | × | ($252,000) | = | $ 42,000 | | B | ($150,000/$300,000) | × | ($252,000) | = | $126,000 | | C | ($100,000/$300,000) | × | ($252,000) | = | $ 84,000 |
B is incorrect. The total cost to be allocated among the three machines is the cost to acquire ($240,000) and to prepare for use ($12,000), a total of $252,000. $300,000 is the total appraised value of the three machines. This total cost is allocated on the basis of relative appraised value. | Machine | | | | | | | A | ($ 50,000/$300,000) | × | ($252,000) | = | $ 42,000 | | B | ($150,000/$300,000) | × | ($252,000) | = | $126,000 | | C | ($100,000/$300,000) | × | ($252,000) | = | $ 84,000 |
C is incorrect. The total cost to be allocated among the three machines is the cost to acquire ($240,000) and to prepare for use ($12,000), a total of $252,000. $300,000 is the total appraised value of the three machines. This total cost is allocated on the basis of relative appraised value. | Machine | | | | | | | A | ($ 50,000/$300,000) | × | ($252,000) | = | $ 42,000 | | B | ($150,000/$300,000) | × | ($252,000) | = | $126,000 | | C | ($100,000/$300,000) | × | ($252,000) | = | $ 84,000 |
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