a company paid 150,000, plus a 7% commission and $5000 in closing costs for a pr

Question

a company paid 150,000, plus a 7% commission and $5000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35000 and a building appraised at $52500. What should be the allocation of this property costs in the company's accounting records? a company paid 150,000, plus a 7% commission and $5000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35000 and a building appraised at $52500. What should be the allocation of this property costs in the company's accounting records? a company paid 150,000, plus a 7% commission and $5000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35000 and a building appraised at $52500. What should be the allocation of this property costs in the company's accounting records?

Explanation / Answer

Total amount paid by the company = 150000+ (150000*7%) + 5000 = $165500

Total appraised value of property = $87500+$35000+$52500 = $175000

Allocation of property costs

For land $165500*87500/175000 = $82750

For land improvements $165500*35000/175000 = $33100

For building $165500*52500/175000 = $49650

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