A Company Purchased Land with a Building for a Lump-Sum

question 113

Essay

A company purchased land with a building for a lump-sum cost of $2,570,000 ($500,000 paid in cash and the balance on a long-term note).It was estimated that the land and building had market values of $600,000 and $2,400,000,respectively.
Determine the cost to be apportioned to the land and to the building and prepare the journal entry to record the acquisition.

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Definitions:

Comparative Advantage

An economic theory that suggests a country should produce and export goods in which it has a lower opportunity cost than other countries.

Temporary Advantage

An advantage or benefit that an organization holds for a short period of time, often due to a unique product, service, or situation.

Knowledge Dissemination

The process of spreading information and insights across different stakeholders, including individuals, organizations, and communities, to enhance understanding and application.