Question

Darrin Brown bought a pub. The purchase price was $695,000. An appraiser provided the following appraisal values: land, $320,000; building, $370,000; and equipment, $60,000. What cost should be allocated to the building

Answer 1

Answer:

$342,867

Explanation:

Use the appraisal values to apportion the purchase price to the cost of the Building.

Calculation of the Cost of Building :

Total Appraisal Value = $320,000 + $370,000 + $60,000

                                    = $750,000

Cost of Building = $370,000 / $750,000 × $695,000

                           = $342,867