Laramie Co.paid $800,000 for a purchase that included land,building,and office furniture.An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land,$100,000,Building,$740,000,and Office Furniture,$160,000.What is the cost that should be allocated to the land?
A)$80,000
B)$70,000
C)$100,000
D)$107,000

Question

Quizplus · Accepted Answer

Total market value of all assets acquired = $100,000 + $740,000 + $160,000 = $1,000,000
Allocation to land = Purchase price of $800,000 × ($100,000 ÷ $1,000,000)= $800,000 × 10% = $80,000