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Land and a warehouse were acquired for $860,000. What amounts should be recorded in the accounting...

Land and a warehouse were acquired for $860,000. What amounts should be recorded in the accounting records for the land and for the warehouse if an appraisal showed the estimated values to be $520,000 for the land and $850,000 for the warehouse? (Round intermediate percentage calculations to 1 decimal place.)

Multiple Choice

$520,000 for land; $860,000 for warehouse.

$520,000 for land; $850,000 for warehouse.

$10,000 for land; $850,000 for warehouse.

$326,800 for land; $533,200 for warehouse.

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Answer #1

Estimated values of land = $520,000 and Warehouse = $850,000

Total Value = $1,370,000

Percentage of land = $520,000 / $1,370,000 = 0.37956 or 38%

Percentage of Warehouse = $850,000 / $1,370,000 = 0.620 or 62%

Amounts that are to be recorded in the accounting records are

Land = $860,000 * 38% = $326,800

Warehouse = $860,000 * 62% = $533,200

option 'D' is correct

$326,800 for land and $533,200 for warehouse

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