A company purchases land and a building on the land.The land is appraised at $160,000 and the building at $640,000.If the Land account is debited for $208,000,then the total purchase price for the land and building must have been

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The total appraised value is $160,000 (land) + $640,000 (building) = $800,000. The land's appraised value is 20% of the total appraised value ($160,000/$800,000). If the Land account is debited for $208,000, which is 20% of the total purchase price, then the total purchase price is $208,000 / 0.20 = $1,040,000.

A Company Purchases Land and a Building on the Land