Tonto Company purchased property for $125,000. The property included a building, equipment and land. The building was appraised at $72,000, the land at $50,000, and the equipment at $23,000. What is the amount of cost to be allocated to the building in the accounting records

Question

Kendra

Business

9 December, 22:52

Tonto Company purchased property for $125,000. The property included a building, equipment and land. The building was appraised at $72,000, the land at $50,000, and the equipment at $23,000. What is the amount of cost to be allocated to the building in the accounting records

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Lincoln Hammond · Answer 1

The cost allocated to the building is $ 62,068.97

Explanation:

The total appraised cost for the components of the property purchased=$72,000+$50,000+$23,000=$ 145,000.00

The cost allocated to the building in the accounting records is the cost of the property multiplied by the building appraised value of $72,000 while dividing by the total of the appraised value of $145,000

cost allocated to building=$125,000*$72,000/$145,000=$ 62,068.97