Beaumont company recently purchased some real estate that contained, land improvements (parking lot) and a building....

Beaumont company recently purchased some real estate that contained, land improvements (parking lot) and a building. Beaumont has the property appraised after the purchase. The information is below:

Land Purchase	375,927

Land Appraisal	175,000
Improvement appraisal	87,000
Building Appraisal	210,000

1	Allocate the total cost to the three assets
	Asset Description	Appraisal Values	Percent of Total Appraised Value	x total acquisition cost	= allocated cost
	Land
	Land improvements
	Building
	Totals

1	Prepare the Journal entry to record the purchase
		Debit	Credit
	Land
	Land improvements
	Building

Solutions

Expert Solution

1- Allocating the total cost to three costs

Asset Description	Appraisal Values	Percentage of Total appraised value	X total acquisition cost	= allocated cost
Land	175000	37.1%	375927	139380
Land improvements	87000	18.4%	375927	69291
Building	210000	44.5%	375927	167256
TOTAL	472000	100%	-	375927

2- Prepare the Journal entry to record the purchase

Particulars	Debit	Credit
Land	139380
Land Improvement	69291
Building	167256
To Cash		375927

ekkarill92 answered 1 year ago

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