Acme purchased a property that included both land and a building for $200 000. Acme hired an appraiser who determined that the market value of the land was $140 000 and the market value of the building was $50 000. At what amount should Acme record the building cost?

Question

Quizplus · Accepted Answer

The building cost is recorded based on its proportionate share of the total market value. The building's market value is $50,000 out of a total market value of $190,000 ($140,000 for land + $50,000 for building). The proportionate cost is ($50,000/$190,000) * $200,000 = $52,632.

Acme Purchased a Property That Included Both Land and a Building