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14 February, 16:25

Tonto Company purchased property for $140,000. The property included a building, equipment and land. The building was appraised at $98,000, the land at $63,000, and the equipment at $36,000. What is the amount of cost to be allocated to the building in the accounting records?

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  1. 14 February, 16:36
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    Amount of cost to the building is $69,645

    Explanation:

    The total property value of Tonto Company = $140,000.

    The total property (building, equipment and land) value of Tonto Company = $140,000.

    The building was appraised at $98,000,

    The land was appraised at $63,000

    The equipment was appraised at $36,000.

    The total current value of the 3 assets = $98,000 + $63,000 + $36,000 The total current value of the 3 assets = $197,000. Amount of cost to the building = ($98,000 x $140,000) / $197,000. Amount of cost to the building = $69,644.67

    Amount of cost to the building = $69,645
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