contestada

LinkUp, Inc. paid $450,000, plus $25,000 in closing costs, to buy a parcel of land with a factory on it. The purchase also contained equipment. The land is appraised at $130,000, a building appraised at $325,000, and equipment appraised at $50,000. Compute the cost that should be allocated to the land.

Respuesta :

Answer: $122,277

Explanation:

The cost that should be allocated to the land should be calculated thus:

Closing cost will be:

= 450,000 + 25,000

= 475,000

Total value of assets will be:

= Value of land + Value of building + Value of equipment

= 130,000 + 325,000 + 50,000

= 505,000

Therefore, cost allocated to land will be:

= (Total payment made x Value of land) / Total value of all assets

= (475,000 x 130,000) / 505,000

= 122,277