A company purchased property for $100,000. The property included a building, a p

Question

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $55,500; the land at $50,200, and the parking lot at $19,300. Land should be recorded in the accounting records with an allocated cost of:

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $55,500; the land at $50,200, and the parking lot at $19,300. Land should be recorded in the accounting records with an allocated cost of:

Explanation / Answer

The allocated cost at which land should be recorded in the accounting records will be computed as follows:

Cost paid for the property = $100,000

Appraised value of land = $50,200

Total appraised cost of building, land, and parking lot = $55,500 + $50,200 + $19,300 = $125,000

Amount at which land should be record = ($100,000 / $125000 ) × $50,200 = $40,160

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