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20 April, 07:36

A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. The cost basis recorded in the buyer's accounting records to recognize this purchase isA. 154,000

B. 172,000

C. 160,000

D. 120,000

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  1. 20 April, 07:52
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    Option (C) 160,000

    Explanation:

    Data provided in the question:

    Appraisal value = $154,000

    Offer price = $172,000

    Cash = $40,000

    Note payable = $45,000

    Mortgage amount = $75,000

    Now,

    Cost basis recorded in the buyer's accounting records to recognize this purchase will be

    = Cash + Note payable + Mortgage amount

    = $40,000 + $45,000 + $75,000

    = $160,000

    Hence,

    Option (C) 160,000
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