The Jacob Corporation Acquired Land, Buildings, and Equipment from a Bankrupt

question 56

Multiple Choice

The Jacob Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $500,000. At the time of acquisition, Jacob paid $20,000 to have the assets appraised. The appraisal disclosed the following values:
Land $\quad$ $\quad$ $100,000
Buildings $\quad$ 200,000
Equipment $\quad$ 300,000
What costs should be assigned to the buildings?

• A) $166,667
• B) $173,333
• C) $200,000
• D) $260,000

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Definitions:

Profit-maximizing

The process of adjusting output and production levels to achieve the highest possible profits.

Output Units

A measure of production that represents the total quantity of goods and services produced over a specific period of time.

ATC

Average Total Cost, a firm's total cost divided by its total output.

Demand

The quantity of a specific good or service that consumers are willing and able to purchase at different price levels, at a given time.