A business will often purchase a group of assets, known as a basket purchase, for a lump sum total cost. This lump sum purchase calculator uses the relative fair market value method to allocate this total cost to each of the individual assets.
The cost allocation allows separation of the assets into various asset categories such as property, plant, and equipment. Subsequently the allocation is useful for recording the assets in the accounting records and depreciating them at the appropriate rate for that asset category.
Using the Lump Sum Purchase Calculator
This lump sum purchase calculator can be used to allocate the total purchase cost of a group of up to 12 assets in proportion to the fair market value of each asset at the time of purchase.
Instructions
The Excel lump sum purchase calculator is available for download below. The use the calculator enter details relating to the purchase amount and the fair market value of each asset.
Costs to Allocate
Firstly enter the lump sum purchase amount.
Allocation
Finally for each asset enter an asset description and its estimated fair market value at the date of purchase.
It is important to realize that a maximum of up to 12 assets can be entered. If there are less than 12 assets in the lump sum purchase then leave the description blank and enter zero for the fair market value amount.
The lump sum purchase worksheet calculates an allocation % for each asset based on its relative fair market value. Subsequently, using the allocation percentage, the calculator allocates the lump sum amount between the group of assets.
Lump Sum Purchase Calculator Download
The lump sum purchase worksheet is available for download in Excel format by following the link below.
The lump sum allocation calculator is one of many financial calculators used in bookkeeping, discover another at the links below.
- Payback Period Calculator
- Cash to Accrual Conversion Calculator
- Future Value of a Growing Annuity Calculator
Users use this lump sum purchase template at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a basket purchase allocation calculator that you might use. It is a purely illustrative of a relative fair market value calculator. This is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the lump sum purchase excel worksheet, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.