Barber Corporation purchased all the assets of TECO Corporation for $1,820,000. An appraisal yielded the following: the building had a fair market value of $1,200,000; equipment a value of $1,000,000; and office equipment a value of $400,000. What is the depreciable basis for the office equipment? a. $400,000

b. $300,000

c. $280,000

d. $250,000

c. $280,000

Explanation:

The depreciable basis for each class of asset given is based on the fair market value of these assets. This is used as the basis for apportionment.

Given;

Total purchase cost of assets = $1,820,000

Fair value of;

Building = $1,200,000

Equipment = $1,000,000

Office equipment = $400,000

The depreciable basis for the office equipment

= ($400,000 / ($400,000 + $1,000,000 + $1,200,000)) * $1,820,000

= ($400,000/$2,600,000) * $1,820,000

= $280,000