Bingo Corporation has acquired a property that included both land and a building for $520,000. The corporation hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $400,000. At what amount should the corporation record the cost of the building?

a. $224,000b. $374,400c. $291,200d. $260,000

Question

Business

Sophia Lucas

29 May, 06:47

Bingo Corporation has acquired a property that included both land and a building for $520,000. The corporation hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $400,000. At what amount should the corporation record the cost of the building?

a. $224,000b. $374,400c. $291,200d. $260,000

+3

Answers (1)

Know the Answer?

Jackson Estes · Answer 1

The answer is: C) $291,200

Explanation:

The appraiser determined that the total value for both the land and building was $720,000. The land was given a $320,000 value which represents 44% of the total value. The building was given a $400,000 value which represents 56% of the total value. I rounded up the percentages.

If the cost of the property was $520,000, then the cost of the land will be $228,800 ( = $520,000 x 44%) and the cost of the building will be $291,200 ( = $520,000 x 56%).