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

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%).

nikitavidya0 nikitavidya0 · Answer 2 · 2022-06-07T13:34:33+02:00

The amount should the corporation record the cost of the building is $291,200.

What is corporation?

Cooperation is the legal entity separate from its owners which is owned by the shareholders who elects the board of directors who looks after the business activities.

The total market value of the land and building = 3,20,000 + 4,00,000

=$7,20,000

Now, we have calculated the percentage of land involved in the total market value are as follows:

= 3,20,000/7,20,000* 100

= 44%

Thus,The building was given a $400,000 value which represents 56% of the total value.

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%).

Thus, the cost of the building is $291,200.

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