Answer:
The amount of the purchase price will be allocated to the Land account is $6,400,000
Explanation:
For computing the purchase price of the land, first we have to compute the weightage of both the fixed assets which are shown below:
For building = Appraised value of building ÷ total value of fixed assets '
= $17,000,000 ÷ $25,000,000
= 68%
where,
Total value of fixed assets = Appraised value of the building + appraised value of the land
= $17,000,000 + $8,000,000
= $25,000,000
For land = Appraised value of land ÷ total value of fixed assets '
= $8,000,000 ÷ $25,000,000
= 32%
So, the purchase price of the land equal to
= Total purchase price of fixed assets × weightage of land
= $20,000,000 × 32%
= $6,400,000
