The Loft Corporation purchased land and a building for $700,000. An appraisal indicates that the land's value is $400,000 and the building's value is $350,000. The amount that The Loft Corporation should debit to the Building account is:

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Quizplus · Accepted Answer

The total purchase price is $700,000, with the land appraised at $400,000 and the building at $350,000, totaling $750,000 in appraised values. The cost allocated to the building is found by dividing the building's appraised value by the total appraised values ($350,000 / $750,000 = 46.67%) and then applying that percentage to the purchase price ($700,000 * 46.67% = $326,667).

The Loft Corporation Purchased Land and a Building for $700,000