Leland Co. paid $400,000 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, $50,000, Building, $370,000, and Office Furniture, $80,000. Based on this information the cost that would be allocated to the land is:
A)$35,000.
B)$40,000.
C)$50,000.
D)$53,500.

Question

Quizplus · Accepted Answer

$50,000/($50,000 + $370,000 + $80,000) = 10% of market value; $400,000 purchase price x 10% = $40,000.

Leland Co Paid $400,000 for a Purchase That Included Land, Building