A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?
A)Land $75,000;Building $30,000;Equipment $45,000
B)Land $75,000;Building $30,800;Equipment $46,200
C)Land $87,500;Building $35,000;Equipment $52,500
D)Land $81,500;Building $32,600;Equipment $48,900

Question

Quizplus · Accepted Answer

The total appraised value is $175,000 ($87,500 + $35,000 + $52,500). The cost of $163,000 should be allocated based on the proportion of each asset's appraised value to the total appraised value. For land: $87,500/$175,000 * $163,000 = $81,500. For building: $35,000/$175,000 * $163,000 = $32,600. For equipment: $52,500/$175,000 * $163,000 = $48,900.

A Company Acquired Property That Included Land,building and Equipment for a Total