Question

A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $52,500; the land at $52,600, and the parking lot at $19,900. Land should be recorded in the accounting records with an allocated cost of:

Answer 1

To determine the allocated cost of the land in the property purchase, we calculate its percentage of the total appraised value and apply it to the purchase price. The land, appraised at $52,600, represents 42.08% of the overall value and should be allocated $42,080 of the $100,000 purchase price.

Step-by-step explanation:

The question at hand involves allocating the purchase price of a property among the assets acquired, which in this case includes a building, a parking lot, and land. To determine the allocated cost of the land, we must use the appraised values of each asset to calculate their respective percentages of the total appraised value and then apply these percentages to the purchase price.

First, we calculate the total appraised value:
$52,500 (Building) + $52,600 (Land) + $19,900 (Parking lot) = $125,000

Next, we calculate the percentage of the total appraised value for the land:
$52,600 / $125,000 = 42.08%

Finally, we apply this percentage to the purchase price to find the allocated cost for the land:
42.08% of $100,000 = $42,080

Thus, the land should be recorded in the accounting records with an allocated cost of $42,080.

Answer 2

Allocated cost of land = $42,080

Step-by-step explanation:

Given:

Total Cost of asset is $100000.

Computation:

Total apprised value = $52,500 + $52,600 + $19,900

Total apprised value = $125,000

Allocated cost of land = [$52,600 / $125,000]$100,000

Allocated cost of land = $42,080

The allocated cost of land would be $42,080