A company purchased property for $ 300,000. The property included an acre of land valued at $ 50,000, a building valued at $ 150,000, and equipment valued at $ 125,000. The building will be recorded at a cost of
A) $ 150,000.
B) $ 140,000.
C) $ 135,000.
D) $ 138,461.

Question

Quizplus · Accepted Answer

The building's cost is allocated based on its proportion of the total appraised value. The total appraised value is $325,000 ($50,000 + $150,000 + $125,000). The building's proportion is $150,000 / $325,000 = 46.15%. Therefore, the building's recorded cost is 46.15% of $300,000, which is $138,461.

A Company Purchased Property for $ 300,000