Minerva Company purchased land and a building for a total price of $5,200,000. Individually, the land was appraised at $840,000 and the building at $4,760,000.
How much should be recorded as the acquisition cost of each asset?
A) Land, $840,000; building, $4,760,000
B) Land, $840,000; building, $4,360,000
C) Land, $780,000; building, $4,420,000
D) Land, $800,000; building, $4,400,000

Question

Quizplus · Accepted Answer

Total appraised value: $840,000 + $4,760,000 = $5,600,000
Land: ($840,000 / $5,600,000) x ($5,200,000) = $780,000
Building: ($4,760,000 / $5,600,000) x ($5,200,000) = $4,420,000

Minerva Company Purchased Land and a Building for a Total