Question

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,900,000. Harding paid $350,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $374,000; Building, $1,100,000 and Equipment, $726,000. What value will be recorded for the building

Answer 1

The value of building is $950,000

Step-by-step explanation:

The real estate basis of $1,900,00 can be apportioned between the three assets on the basis of their appraised values as computed below:

The applicable formula=real estate basis*asset appraised value/total appraised values

Total appraised values=$374,000+$1,100,000+$726,000=$2,200,000.00

real estate cost is $1,900,000

land cost =$1,900,000*$374,000/$2,200,000

=$323,000

building cost =$1,900,000*$1,100,000/$2,200,000

=$950,000

equipment cost =$1,900,000*$726,000/$2,200,000

=$627,000