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 equipment will be recorded at a cost of
A) $ 125,000.
B) $ 120,000.
C) $ 118,723.
D) $ 115,384.

Question

Quizplus · Accepted Answer

The equipment's cost is determined by its proportion of the total appraised value. The total appraised value is $325,000 ($50,000 + $150,000 + $125,000). The equipment's proportion is $125,000 / $325,000 = 0.3846. The equipment's recorded cost is 0.3846 * $300,000 = $115,384.

A Company Purchased Property for $ 300,000