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    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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    When lumpsum is paid, the cost is allocated on the base of fair market value which ...

    Solution Summary

    The solution explains how to allocate the cost of basket purchase to its constituents