Question

Mark's Markers purchased a building and land for $750,000. An appraisal determined that two-thirds of the cost should be attributed to the building and one-third should be attributed to the land. Consequently, Mark's Markers will use a cost basis of

Answer 1

Land = $500,000

Building = $250,000

Step-by-step explanation:

Since in the question it is given that the total purchase cost of land and building is $750,000

And, the ratio for the building would be two-thirds and for land it would be one-third

So, the cost basis

For building = $750,000 × 2 ÷ 3 = $500,000

For land = $750,000 × 1 ÷ 3 = $250,000

We simply multiplied the allocated ratio with the total purchase cost i.e $750,000 so that the correct amount can come