Question

Laramie Co. paid $1,200,000 for a purchase that included land, building, and office furniture. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land, $234,000, Building, $754,000, and Office Furniture, $312,000. Based on this information the cost that would be allocated to the land is: (Do not round intermediate calculations.)

Answer 1

$216,000

Step-by-step explanation:

The computation of the cost is shown below:-

For computing the cost that would be allocated to the land first we need to compute the total cost and total cost of land in percentage

Total cost = Cost of land + Cost of building + Cost of office furniture

= $234,000 + $754,000 + $312,000

= $1,300,000

Total cost of Land in percentage = $234,000 ÷ $1,300,000

= 0.18

Cost of land = Total cost of Land in percentage × Purchase price

= 0.18 × $1,200,000

= $216,000