Boyle Company purchased a property (including land and building). The company acquired the property in exchange...

Boyle Company purchased a property (including land and building). The company acquired the property in exchange for a 15-year mortgage for $1,800,000. Their insurance company appraised the components as follows:

Land $400,000

Building $1,400,000

Parking Lot $200,000

What should be the cost basis for the building?

Expert Solution

Total appraisal value

= 400,000+1,400,000+200,000 = 2,000,000

Cost basis for the building

= (1,400,000/2,000,000)*1,800,000

= 1,260,000

ekkarill92 answered 2 years ago

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