Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,900,000. Harding paid $350,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $374,000; Building, $1,100,000 and Equipment, $726,000. What value will be recorded for the building?

Question

Quizplus · Accepted Answer

The value recorded for the building is determined by allocating the total cost of the property ($1,900,000) based on the appraised values. The total appraised value is $374,000 (Land) + $1,100,000 (Building) + $726,000 (Equipment) = $2,200,000. The building's proportion of the total appraised value is $1,100,000 / $2,200,000 = 0.5. Therefore, the building's value recorded is 0.5 * $1,900,000 = $950,000.

Harding Corporation Acquired Real Estate That Contained Land, Building and Equipment