Grasshopper Room Company acquired land and buildings for $1,500,000.The land is appraised at $475,000 and the buildings are appraised at $775,000.The debit to the Buildings account will be:

Question

Quizplus · Accepted Answer

The total appraised value of the land and buildings is $1,250,000 ($475,000 + $775,000). The buildings' proportion of the total appraised value is $775,000 / $1,250,000 = 0.62. Therefore, the debit to the Buildings account is 0.62 * $1,500,000 = $930,000.

Grasshopper Room Company Acquired Land and Buildings for $1,500,000