Nobells Ltd Purchased a Property That Included Both Land and a Building

question 56

Multiple Choice

Nobells Ltd purchased a property that included both land and a building for $570,000.The company hired an appraiser who has determined that the market value of the land is $380,000 and that of the building is $430,000.At what amount should the company record the cost of land?

• A)$158,421
• B)$66,667
• C)$267,407
• D)$285,000

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Definitions:

Salvage Value

The expected end-of-life value of an asset after its useful period has ended.

Acceptable Earnings Rate

The minimum rate of return on investment that a company or investor is willing to accept, considering the risk and opportunity cost of the investment.

Useful Life

The estimated period over which a fixed asset is expected to be usable by the business, impacting depreciation calculations.

Salvage Value

An estimation of what an asset will be worth at the end of its usable life.