Question

ALCULATOR FULL SCREEN PRINTER VERSION BACK Question 5 Marigold Co. purchased for $2,129,000 property that induded both land and a building to be used in operations. The seller's book for the building. By appraisal, the fair value was estimated to be $646,700 for the land and $1,940,100 for the building. At what amount should Marigold report the land and the building at the end of the year? (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places e.g. 58,971.) Cost allocated to land Cost allocated to building Question Attempts: 0 of 1 used SAVE FOR LATER SUBMIT ANSWER y. Rese Privasy Policy 1 S

Answer 1

SOLUTION

The total purchase price of $2,129,000 should be allocated to the land and building on the basis of the estimated fair values.

Total estimated fair value = $646,700 + $1,940,100 = $2,586,800

Cost allocation:

Land-

= $2,129,000 * $646,700 / $2,586,800

= $532,250

Building-

= $2,129,000 * $1,940,100 / $2,586,800

= $1,596,750