Hastings Company has purchased a group of assets for $15,000. The assets and their relative market values are listed below. $$\begin{array} { | l | r | }
\hline \text { Land } & \$ 6,500 \
\hline \text { Equipment } & 2,000 \
\hline \text { Building } & 9,000 \
\hline
\end{array}$$ Which of the following amounts would be debited to the Land account?

Question

Hastings Company has purchased a group of assets for $15,000. The assets and their relative market values are listed below. $$\begin{array} { | l | r | } 
\hline \text { Land } & \$ 6,500 \
\hline \text { Equipment } & 2,000 \
\hline \text { Building } & 9,000 \
\hline
\end{array}$$ Which of the following amounts would be debited to the Land account?

Quizplus · Accepted Answer

To determine the amount that should be debited to the Land account, we need to use the relative market values of the assets given in the problem.

First, we need to find the total relative market value of the assets:

$6,500 + $2,000 + $9,000 = $17,500

Next, we can calculate the percentage of the total value that is represented by the Land:

$6,500 ÷ $17,500 = 0.3714 (rounded to four decimal places)

This means that the Land represents approximately 37.14% of the total value of the assets.

Finally, we can use this percentage to determine the amount that should be debited to the Land account:

$15,000 × 0.3714 ≈ $5,571

Therefore, the best choice is B, which represents the amount of $5,571 that should be debited to the Land account.

Hastings Company Has Purchased a Group of Assets for $15,000