Question

A building with an appraisal value of $127,275.00 is made available at an offer price of $153,406.00. The purchaser acquires the property for $37,140.00 in cash, a 90-day note payable for $21,768.00, and a mortgage amounting to $54,637.00. What is the cost basis recorded in the buyer's accounting records to recognize this purchase?

Select the correct answer.
A) $127,275.00
B) $116,266.00
C) $153,406.00
D) $113,545.00

Answer 1

To determine the cost basis recorded in the buyer's accounting records for this purchase, we need to consider the total amount paid by the buyer, including cash, notes payable, and the mortgage.

The cash paid is $37,140.00, the note payable is $21,768.00, and the mortgage is $54,637.00. Adding these amounts together gives us:

$37,140.00 + $21,768.00 + $54,637.00 = $113,545.00

Therefore, the cost basis recorded in the buyer's accounting records to recognize this purchase is $113,545.00.

The correct answer is:

D) $113,545.00