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Determine the cost of the inventory

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Question - Company A paid cash and purchased the assets of Company B at an auction for $4,900,000 on October 1, 2020. The information on the book values of the assets on Company B's balance sheet is listed below:

Land $820,000

Building 1,118,000

Inventory 530,000

Machine 780,000

Based on an independent appraisal, the fair value of inventory is determined to be equal to its book value, and the fair values of land, building and machine are determined to be $1,850,000, $3,400,000 and $220,000, respectively. In the entry made by Company A on October 1, 2020 to record the purchase, determine the cost of the inventory?

Reference no: EM133140382

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