Share
Explore BrainMass

Basket Purchase

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

Solution Preview

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

$2.19