Abbott Industries Bought a Property with Land and a Building

question 30

Multiple Choice

Abbott Industries bought a property with land and a building on it for $20,000,000.An independent appraisal of the land put the value of the land between $5,000,000 and $8,000,000.If Abbott's financial reporting objective is to report maximum performance how should the cost be allocated to the two assets? $\begin{array}{ll}&\text {Land }&\text {Building }\\\hline\text { A) } &\$ 5,000,000 & \$ 15,000,000 \\\text { B) } &\$ 6,500,000 & \$ 13,500,000 \\\text { C) } &\$ 8,000,000 & \$ 12,000,000 \\\text { D) }& \$ 10,000,000 & \$ 10,000,000\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Insight

A sudden and often novel realization of the solution to a problem, representing a leap in understanding that goes beyond the step-by-step logical process.

Spontaneous Recovery

The reappearance of a previously extinguished response after a period of no exposure to the conditioned stimulus.

Latent Learning

Learning that occurs without noticeable reinforcement and is not demonstrated until there is an incentive to perform.

Vicarious Learning

The process of learning behaviors or forming attitudes based on observing the actions of others and the consequences of those actions.