Question

Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $1,300,000. According to independent appraisals, the fair values were $630,000 (building A) and $280,000 (building B) for the buildings and $490,000 for the land. Required: Determine the initial valuation of the buildings and the land. Initial Asset Valuation Building A Building B Land Total

Answer 1

Asset	Fair Value	Percent of Total	Initial Valuation
		Fair Value	(Percent x $1,300,000)
Building A	$      630,000.00	45%	$              585,000.00
Building B	$      280,000.00	20%	$              260,000.00
Land	$      490,000.00	35%	$              455,000.00
	$ 1,400,000.00	100%	$         1,300,000.00