A company purchased property for $100,000. The property included a building, a parking lot, and land. The building was appraised at $62,000; the land at $45,000, and the parking lot at $18,000. Land should be recorded in the accounting records with an allocated cost of:
A) $0.
B) $36,000.
C) $42,000.
D) $45,000.
E) $100,000.

Question

Quizplus · Accepted Answer

The total appraised value is $125,000 ($62,000 + $45,000 + $18,000). The land's appraised value is $45,000. The allocation is based on the proportion of the appraised value: ($45,000 / $125,000) * $100,000 = $36,000.

A Company Purchased Property for $100,000