16. A company paid $150,000, plus a 7% commission and SS000 in closing costs for

Question

16. A company paid $150,000, plus a 7% commission and SS000 in closing costs fora property. The property included land appraised at $87.500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property's costs in the company's accounting records? A) Land $75,000; Land Improvements, $30,000; Building, $45,000 B) Land $75,000; Land Improvements, $30,800; Building, $46,200. C) Land $82,750; Land Improvements, $33,100; Building, $49,650. Land Improvements, $32,100; Building $48,150.

Explanation / Answer

total cost = 150000 + 150000 * 0.07 + 5000 = 165500

land value = (87500/87500+35000+52500) * 165500 = 82750

improvement value =  (35000/87500+35000+52500) * 165500 = 33100

building value =  (52500/87500+35000+52500) * 165500 = 49650

hence choose C)

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.