Question

Carver Inc. purchased a building and the land on which the building is situated for a total cost of $939,300 cash. The land was appraised at $248,445 and the building at $831,750. Required a. Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building. b. Would the company recognize a gain on the purchase? c. Record the purchase in a statements model like the following one. d. Record the purchase in general journal format. Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Determine the amount of the purchase cost to allocate to the land and the amount to allocate to the building. (Do not round intermediate calculations. Round your final answers to nearest whole dollar.) Allocated Cost $ 57,145 Land Building Total $ 57,145 < Required A Required B >

Answer 1

Requirement A Market Percent of total Allocated cost value market value $216,039 $723,261 $939,300 Land 23% 248,445 Building Total 77% 831,750 1,080,195 Requirement B Yes, company would recognize a gain on the purchase -1,080,195-939,300 140,895

Requirement C

Balance sheet Income statement Liabilities Equity Revenue Expense Net income Statement of cash flows Assets Building Cash Land -939,300 IA -939,300 216,039 723,261

Requirement D

Account titles and explanation Credit Debit Date Land 216,039 Building 723,261 Cash 939,300