Land and a building on the land are purchased for $310,000.The appraised values of the land and building are $66,000 and $264,000,respectively.The cost allocated to the building should be
A)$25,200.
B)$109,800.
C)$135,000.
D)$248,000.

Question

Quizplus · Accepted Answer

The cost allocated to the building is determined by calculating the proportion of the total purchase price that corresponds to the value of the building. We can find this proportion by dividing the value of the building by the sum of the values of the land and building:
$264,000 / ($66,000 + $264,000) = 0.8
Therefore, 80% of the purchase price corresponds to the building, and the remaining 20% corresponds to the land. We can calculate the cost allocated to the building by multiplying the total purchase price by this proportion:
$310,000 x 0.8 = $248,000 
Therefore, the cost allocated to the building is $248,000. Answer choice D is correct.

Land and a Building on the Land Are Purchased for $310,000.The