Olivia Taylor Co.built three houses for a total cost of $192,000.Appraisal values for the three completed houses were: white house,$48,000,blue house $72,000,and green house $120,000.Using the basket purchase allocation,the recorded value of the green house should be:
A)$96,000.
B)$120,000.
C)$64,000.
D)$80,000.

Question

Quizplus · Accepted Answer

Total market value = $48,000 + $72,000 + $120,000 = $240,000
Green house's percentage value = Green's market value ÷ Total market value
= $120,000 ÷ $240,000 = 50%
Green house's cost = Total cost × Green house's percentage value
= $192,000 × 0.50 = $96,000