Acme Purchased a Property That Included Both Land and a Building

question 77

Multiple Choice

Acme purchased a property that included both land and a building for $200,000.Acme hired an appraiser who determined that the market value of the land was $140,000 and the market value of the building was $50,000.
-At what amount should Acme record the building cost?

• A) $147,368
• B) $52,632
• C) $200,000
• D) $140,000

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Definitions:

Contribution Margin

The gap between income from sales and variable expenses, which is utilized to pay for fixed expenses and produce earnings.

Selling Price

Selling price is the amount a buyer pays to purchase a product or service from a seller.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor costs.

Fixed Cost

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance, providing predictability but fixed financial commitments.