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6 March, 04:48

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $1,900,000. Harding paid $525,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $555,000; Building, $1,650,000 and Equipment, $1,095,000. (Round percentages to two decimal places: ie. 054 = 5%).

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  1. 6 March, 06:55
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    Answer: C. 950,000

    Explanation:

    First we will calculate the Total Appraisal Value of the Property,

    Total Appraisal value of Property = Land+Building+Equipment

    =$555,000+$1,650,000+$1,095,000

    = $3,300,000

    Now that we have the Total Appraisal Value we can apportion original cost based on the proportion of the Property that the Building was Appraised at,

    Cost of Property = $1,900,000

    Proportion of Building in Appraised value is = 1,650,000/3,300,000

    Value to be recorded for Building will therefore be,

    =$1,900,000 ($1,650,000/$3,300,000)

    = $950,000

    $950,000 will be recorded as the cost of the Building.
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