Question

The Jacob Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $500,000. At the time of acquisition, Jacob paid $20,000 to have the assets appraised. The appraisal disclosed the following values: Land $100,000 Buildings 200,000 Equipment 300,000 What costs should be assigned to the buildings

Answer 1

Answer:

173,333.33

Explanation:

Lumpsum + Appraisal = Total Spent

500,000 + 20,000 = 520,000

Land + Building + Equipment = Total Fair Value

100,000 + 200,000 + 300,000 = 600,000

Building Costs:

Fair Value Building / Total Fair Value = % of the building cost to apply to the total spent x Total Spent

200,000 /600,000 = .3333 x 520,000 = 173,3333.33