Answer:
$140,000
Explanation:
Data given in the question
Lump sum value of land and building = $420,000
Fair market value of land = $160,000
Fair market value of building = $320,000
The computation of the cost assigned to the land is shown below:
= Lump sum cost of purchased land and building × fair market value of land ÷ total fair market value of land and building
= $420,000 × $160,000 ÷ ($160,000 + $320,000)
= $420,000 × $160,000 ÷ $480,000
= $140,000
