Tango Company purchased land and a building for $350,000.If the assets had been purchased separately,the company would have paid $170,000 for the land and $210,000 for the building.What amount should be recorded for the LAND?

Question

Quizplus · Accepted Answer

To allocate the total cost between the land and the building, we use the relative fair market value method. The fair market values are $170,000 for the land and $210,000 for the building, totaling $380,000. The cost allocated to the land is ($170,000 / $380,000) * $350,000 = $156,579.

Tango Company Purchased Land and a Building for $350,000