Question

A company purchases a 12,320-square-foot commercial building for $405.000 and spends an additional $78,000 to divide the space into two separate rental units and prepare it for rent Unit A, which has the desirable location on the corner and contains 2,520 square feet, will be rented for $1.50 per square foot. Unit B contains 9,800 square feet and will be rented for $0.90 per square foot. How much of the joint cost should be assigned to Unit B using the value basis of allocation? Market Value Joint Cost Percent of Market Value Numerator Denominator % of Mkt Value Apportioned Cost Unit A Unit B Totals 0.00%

Answer 1

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Market Value
Unit A	2520*$1.50	$            3,780
Unit B	9800*$0.90	$            8,820
	Market value	Numerator	Denominator	% of Market Value	Joint Cost	Apportion Cost
Unit A	$                   3,780	$            3,780	$              12,600	30.00%	$    483,000	$               144,900
Unit B	$                   8,820	$            8,820	$              12,600	70.00%	$    483,000	$               338,100
Total	$                 12,600