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27 April, 22:54

Bingo Corporation has acquired a property that included both land and a building for $520,000. The corporation hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $400,000. At what amount should the corporation record the cost of the building?

a. $224,000b. $374,400c. $291,200d. $260,000

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  1. 28 April, 01:21
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    The answer is: C) $291,200

    Explanation:

    The appraiser determined that the total value for both the land and building was $720,000. The land was given a $320,000 value which represents 44% of the total value. The building was given a $400,000 value which represents 56% of the total value. I rounded up the percentages.

    If the cost of the property was $520,000, then the cost of the land will be $228,800 ( = $520,000 x 44%) and the cost of the building will be $291,200 ( = $520,000 x 56%).
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