Question ters 1 10poirts Brief Exercise 10-3 Lump-sum acquisition [L010-2) Fuler

Question

Question ters 1 10poirts Brief Exercise 10-3 Lump-sum acquisition [L010-2) Fulerton Waste Management purchased land and a warehouse for $640,000 In addition to the purchase price, Fullerton made the followng expenditures related to the acqusition broker's commssion, $34,000, values of the land and warohouse at $555,000 and $185,000, respectively Determine the amounts Fuilerton should g costs, $8.000 An ndependent appraisal estimates the far captalize as the cost of the land and the buiding Captalized cost of land Capnalized cost of buildng Reterences Brief Exercise 10.3 Lump-sum acquistan CL010 TOSHIBA 2 3 4 5 tab 9 shift

Explanation / Answer

Compute capitalized cost of land and building :

Total Appraisal value = (555000+185000) = 740000

Capitalize cost of land = (687000*555000/740000) = 515250

Capitalize cost of Building = (687000*185000/740000) = 171750

Purchase price 640000 Broker's commission 34000 Title insurance fees 5000 Misc. Closing cost 8000 Total capitalize cost 687000

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