Comptel Corporation purchased land,a building and equipment for a total cost of $525,000.The appraised values of the land,building and equipment were $150,000,$375,000 and $75,000,respectively.The purchase price allocated to the building should be:

Question

Quizplus · Accepted Answer

The purchase price should be allocated to each asset based on their relative appraised values. The building's appraised value is $375,000 out of the total appraised value of $600,000 ($150,000 + $375,000 + $75,000). Therefore, the portion of the purchase price allocated to the building should be ($375,000/$600,000) x $525,000 = $328,125. Therefore, the answer is B.

Comptel Corporation Purchased Land,a Building and Equipment for a Total