Barbarino Corporation purchased land and a building for $1,200,000. An appraisal indicates that the land's market value is $500,000 and the building's market value is $1,000,000. When recording this transaction Barbarino should debit: (Do not round any intermediary calculations, and round your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The total purchase price should be allocated between the land and the building based on their relative market values. The land's market value is 1/3 of the total market value ($500,000 / $1,500,000), so the land should be debited for 1/3 of the purchase price: $1,200,000 * (1/3) = $400,000.

Barbarino Corporation Purchased Land and a Building for $1,200,000