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Best Beauty Salon purchased land and a building for $9,000,000 on 1/1
Best Beauty Salon purchased land and a building for $9,000,000 on 1/1. The estimated fair market values of the land and building are $2.000.000 and $8,000,000, respectively. What amount should be recorded in the building account on 1/1? Fill in the blank with your calculated number. DO NOT include commas. $ signs, period, decimal points, etc., just enter the raw number. Webcourses will add commas to your answer automatically. For example, if you calculated the answer to be $24.123. you would only input: 24123
Expert Solution
7200000
Explanation:
Calculation of proportionate % of each assets:
| Asset | Fair Value | Proportion of each assets |
| Land | $2,000,000 | 20% |
| Building | $8,000,000 | 80% |
| Total | $10,000,000 | 100% |
Calcuation of initial value of assets:
| Asset | Lumpsum Value | Proportion of each assets | |
| Land | $9,000,000 | 20% | $1,800,000 |
| Building | $9,000,000 | 80% | $7.200.000 |
| Total | 100% | $9,000,000 |
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