Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $2,755,000....

Harding Corporation acquired real estate that contained land, building and equipment. The property cost Harding $2,755,000. Harding paid $840,000 and issued a note payable for the remainder of the cost. An appraisal of the property reported the following values: Land, $888,000; Building, $2,640,000 and Equipment, $1,752,000. What value will be recorded for the building?

Solutions

Expert Solution

The Difference between the Appraised value and fair market value.

Appraised value and fair market value both take on the task of determining the worth of a business or property in a free market. An appraisal value is an expert's best estimation of what the entity is worth, while the fair market value is what it should sell for. The appraised value and fair market value, in theory, should come out to the same amount. However, that often proves not to be the case in practice.

- The value will be recorded for the building is $1377500

Here, the appraisal report indicated that the building's value is $2,640,000 out of the $5280,000 (888,000+2,640,000+1752,000) of total appraised value, we can assign 5% or .054 (Given) of the total cost of $2,755,000 to the building,

= $2,755,000*5/100

= $1377500

= 2755,000 * [2640,000/(888,000+2,640,000+1752,000)]

=2755,000*2640,000/5280,000

=2755,000 * 0.5

=13,77,500

ekkarill92 answered 10 months ago

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