17. Anna Corp. purchased a used machine for $17,500. The machine required instal

Question

17. Anna Corp. purchased a used machine for $17,500. The machine required installation costs of $7,000 and insurance while in transit of $600. The machine will be insured during its useful life for $400. Which amount should Anna Corp record as the machine’s actual cost? A) $17,500 B) $25,100 C) $17,600 D) $24,500

18. Laura Corp acquired a property that includes both land and a building for $570,000. The corporation hired an appraiser, Lance, who determined the market value of the land is $300,000 and that of the building is $430,000. At what amount should Laura Corp record the cost of the land? (Round intermediate calculations to two decimal places, and final answer to nearest dollar.) A) $444,600 B) $233,700 C) $285,000 D) $123,000

Explanation / Answer

17.

Machine's actual cost = Purchase price + Installation costs + Insurance while in transit

= 17,500 + 7,000 + 600

= 25,100

18.

Total market value of land and building = 300,000 + 430,000 = 730,000

Percentage of market value allocated to land = 300,000 / 730,000 = 41%

Amount that Laura Corp should record the cost of the land = 570,000 *41%

= 233,700

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