Question

Laramie Corporation has acquired a property that included both land and a building for $ 500 comma 000. The corporation hired an appraiser who has determined that the market value of the land is $ 310 comma 000 and that of the building is $ 400 comma 000. At what amount should the corporation record the cost of the​ building? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

Answer:

$281,700

Explanation:

The computation of cost of the​ building is shown below:-

Market value of total assets = Market value of land + Market value of building

= $310,000 + $400,000

= $710,000

Share of buildings in total market value = Market value of building ÷ Market value of total assets

= $400,000 ÷ $710,000

= 56.33%

So, Cost of building to be recorded = Combined cost of land and building × Share of buildings in total market value

= $500,000 × 56.34%

= $281,700