Question

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $54,500; the land at $51,000, and the parking lot at $19,500. Land should be recorded in the accounting records with an allocated cost of:______

Answer 1

Answer: $40,800

Explanation:

Land should be recorded based on its proportion of the appraised value.

Total appraised value = 54,500 + 51,000 + 19,500

= $125,000

Land allocated cost = Weight of land in appraised value * Total Purchase price

= 51,000/125,000 * 100,000

= $40,800