Maxco Company acquired land and buildings for $1,000,000. The land is appraised at $450,000 and the buildings are appraised at $800,000. The debits to the Land and Buildings accounts will be:

Question

Quizplus · Accepted Answer

The total appraised value is $1,250,000 ($450,000 for land + $800,000 for buildings). The cost is allocated based on the proportion of each appraised value to the total appraised value. Land: ($450,000/$1,250,000) * $1,000,000 = $360,000. Building: ($800,000/$1,250,000) * $1,000,000 = $640,000.

Maxco Company Acquired Land and Buildings for $1,000,000