On March 3,2015,Sally Purchased and Placed in Service a Building

question 90

Essay

On March 3,2015,Sally purchased and placed in service a building costing $12,000,000.The building has 10 floors.The bottom three floors are rented out to businesses.The top seven floors are residential apartments.The gross rents from the businesses are $60,000 and the gross rents from the apartments are $110,000.Determine Sally's cost recovery for the building in 2015.

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Definitions:

Segmented Income Statement

An income statement that shows financial results for different segments or divisions of a company.

Contribution Format

A type of income statement that categorizes costs as variable or fixed and computes a contribution margin.

Common Fixed Expenses

Expenses that do not vary with the level of production or sales, shared across different segments of a business, such as rent for the corporate office.

Sales Mix

The relative proportions in which a company’s products are sold. Sales mix is computed by expressing the sales of each product as a percentage of total sales.