Makemore Company Purchases a Factory for $800,000

question 68

Multiple Choice

Makemore Company purchases a factory for $800,000. The purchase price is properly allocated 90% to the building and 10% to the land. In the first year, Makemore adds a storage shed to the building at a cost of $8,000. The utility company pays Makemore $1,500 for an easement to run utility lines across the land. A total depreciation of $45,000 is deducted over the 3 years. Determine the adjusted basis of the building and the land as of the end of year 3:

• A)$728,000 building; $78,500 land
• B)$683,000 building; $80,000 land
• C)$683,000 building; $78,500 land
• D)$728,000 building; $80,000 land

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Definitions:

Right Of Full Participation

The entitlement of all members of a group to fully engage in the group's activities or decision-making processes.

Board Of Directors' Meetings

Formal gatherings of the board members of an organization to deliberate and decide on corporate affairs.

Shareholders

Individuals or entities that own one or more shares of stock in a corporation, making them partial owners of the company.

Classes Of Common Shares

Different categories of common stock that a corporation may issue, each with specific rights, privileges, and benefits that may vary from other classes.