The purchase of a number of assets together, usually for a better price (reduced price) than would be obtained on an individual basis. An entity recognizing a basket purchase shall reports each of the assets in the purchase separately at its proportional value from the fair market value (FMV) of the purchase.

For example, if a manufacturer buys three machines (for different uses as part of the production process) from the same seller for for $50,000, where the fair market value of the first is $20,000, the second is $18,000 and the third is $12,000, then the manufacturer must establish the proportional value of each machine to the total price in order to determine its original cost to the company. The individual price for each machine could have been $22,000, $20,000, and $13,000, respectively.

As such, had the company purchased each machine separately, the total cost would have been $55,000. However, given the basket purchase, the actual total cost is $50,000.

In order to report each item’s cost to the company separately in its books, the prorated cost of each asset purchased must be calculated based on each asset’s percentage value of the total cost, using the original percentage.