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.
A)$97,500.
B)$105,000.
C)$89,178.
D)$140,000.
E)$93,000.

Question

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