Answer:
$53,571 $ $71, 429
Explanation:
The basis for land and warehouse represents the value to be recorded in the books of Bob. When assets are acquired, they are recorded at their cost price, referred to as the basis.
Bob acquired the land and the warehouse by paying a total of $125,000. The combined basis for the two will be $125,000. To determine the basis for each, we will use their fair value to apportion the basis proportionately.
The total fair value for the land and warehouse is $175,000( 75,000 + 125,000)
The basis for the warehouse will be
=75,000/175,000 x 125,000
=0.428571 x 125,000
=$53,571
The basis for land
=100,000/175,000 x 125,000
=0.571428 x 125,000
=$71, 429
