In a group purchase, how is the acquisition cost of each asset calculated?

In a group purchase, the appropriate method for calculating the acquisition cost of each asset involves dividing each asset's fair market value by the total acquisition costs. This approach ensures that each asset's cost is proportionate to its value in relation to the entire package purchased.

When multiple assets are acquired together, it is critical to allocate the total cost of the group purchase based on the individual fair market values. This method reflects the relative worth of each asset, allowing for a fair distribution of the acquisition cost. This is important because it prevents any bias towards more expensive assets and ensures a more accurate representation of each asset's value on the balance sheet for financial reporting.

The other methods are less appropriate as they either do not consider the fair market value properly or do not provide an equitable distribution of costs among the assets. For instance, simply summing the fair market values and adjusting for depreciation fails to allocate the initial acquisition costs appropriately. Assigning equal costs does not take into account the differing values of the assets, while using only the highest fair market value asset completely ignores the costs associated with the other assets. Thus, option A reflects the most accurate method for calculating acquisition costs in a group purchase.