Final answer:
The recorded value for the land should be $251,280, and for the warehouse should be $468,720 after applying the corresponding percentages of their appraisal values to the total purchase price.
Step-by-step explanation:
To calculate the amounts that should be recorded for both the land and the warehouse when acquired together for $720,000, with appraisal values of $380,000 for the land and $710,000 for the warehouse, we first need to determine the total appraised value.
Adding the individual appraised values gives us a total of $1,090,000 ($380,000 for the land + $710,000 for the warehouse). We then find the percentage of the total value each represents by dividing the appraisal value of each by the total appraisal value.
The land's proportion: ($380,000 / $1,090,000) × 100 = 34.9%
The warehouse's proportion: ($710,000 / $1,090,000) × 100 = 65.1%
Next, we apply these percentages to the purchase price to determine the value of each for accounting purposes:
The land's value in the accounting records: 34.9% of $720,000 = $251,280 (rounded to the nearest dollar)
The warehouse's value in the accounting records: 65.1% of $720,000 = $468,720 (rounded to the nearest dollar)
The recorded value for the land should be $251,280 and for the warehouse should be $468,720.
Now, let's calculate:
Total Appraised Value=$380,000+$710,000=$1,090,000
Percentage for Land=$1,090,000/$380,000 ×100≈34.9%
Percentage for Warehouse= $1,090,000/$710,000 ×100≈65.1%
Cost Allocated to Land=$720,000×0.349≈$251,280
Cost Allocated to Warehouse=$720,000×0.651≈$468,720
Therefore, based on the appraisal values, you would record:
Land: $251,280
Warehouse: $468,720