ABC Co.purchased land and building at a price of $480,000.ABC also incurred a real estate broker's fee of $5,000 and legal fees of $2,000 to complete the purchase.ABC paid $3,000 to obtain a real estate appraisal prior to the purchase.The appraisal indicated that,valued separately,the land was worth $260,000 and the building was worth $240,000.The land should be recorded in the accounting records for:
A)$249,600.
B)$253,240.
C)$254,800.
D)$259,600.

Question

Quizplus · Accepted Answer

The cost of the land can be allocated based on the appraisal values. Therefore, the cost of the land would be 260,000/500,000 * 480,000 = $249,600. However, since there were additional fees incurred, the total cost of the land would be 249,600 + 5,000 + 2,000 + 3,000 = $259,600.

ABC CoPurchased Land and Building at a Price of $480,000