A company paid $150,000, plus 6% commission, and $4,000 in closing costs for a property

Accounting Mar 25, 2021

A company paid $150,000, plus 6% commission, and $4,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property’s of this property’s costs in the company’s accounting records?

1. Land $75,000; Land Improvements, $30,000; Building, $45,000
2. Land $75,000; Land Improvements, $30,800; Building, $46,200
3. Land $81,500; Land Improvements, $32,600; Building, $48,900
4. Land $79,500; Land Improvements, $32,600; Building, $47,700
5. Land $87,500; Land Improvements, $35,000; Building, $52,500

Expert Solution

Answer:

c .

Step-by-Step explanation

Correct option is "C"

Company paid = $150000 + (.06 * $150000) + $4000

= $163000

Therefore land $81500 + improvement $ 32600 + building $48900 = $163000

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