Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000.
-Compute the cost that should be allocated to the building.

Question

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $35,000, a building appraised at $105,000, and paddleboats appraised at $210,000. 
-Compute the cost that should be allocated to the building.

Quizplus · Accepted Answer

The total appraised value is $350,000 ($35,000 + $105,000 + $210,000). The building's appraised value is $105,000. The total purchase cost is $325,000 ($310,000 + $15,000). The allocation to the building is ($105,000 / $350,000) * $325,000 = $97,500.

Riverboat Adventures Pays $310,000 Plus $15,000 in Closing Costs to Buy