Basket Purchase
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R. Corporation purchased for $855,000 a tract of land on which was located a warehouse and office building. The following data were collected concerning the property:
Current Assessed Valuation Vendor's Original Cost
Land $300,000 $280,000
Warehouse 200,000 180,000
Office building 400,000 340,000
Total $900,000 Total $800,000
What are the appropriate amounts that Renner should record for the land, warehouse, and office building, respectively?
a. Land, $280,000; warehouse, $180,000; office building, $340,000.
b. Land, $300,000; warehouse, $200,000; office building, $400,000.
c. Land, $299,250; warehouse, $192,375; office building, $363,375.
d. Land, $285,000; warehouse, $190,000; office building, $380,000
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Solution Summary
The solution explains how to allocate the cost of basket purchase to its constituents
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When lumpsum is paid, the cost is allocated on the base of fair market value which ...
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