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3 October, 08:58

Barber Corporation purchased all the assets of TECO Corporation for $1,820,000. An appraisal yielded the following: the building had a fair market value of $1,200,000; equipment a value of $1,000,000; and office equipment a value of $400,000. What is the depreciable basis for the office equipment? a. $400,000

b. $300,000

c. $280,000

d. $250,000

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  1. 3 October, 09:41
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    c. $280,000

    Explanation:

    The depreciable basis for each class of asset given is based on the fair market value of these assets. This is used as the basis for apportionment.

    Given;

    Total purchase cost of assets = $1,820,000

    Fair value of;

    Building = $1,200,000

    Equipment = $1,000,000

    Office equipment = $400,000

    The depreciable basis for the office equipment

    = ($400,000 / ($400,000 + $1,000,000 + $1,200,000)) * $1,820,000

    = ($400,000/$2,600,000) * $1,820,000

    = $280,000
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