A Company Purchased Land with a Building for a Total

question 19

Essay

A company purchased land with a building for a total cost of $2,570,000 ($500,000 paid in cash and the balance on a long-term note). It was estimated that the land and building had market values of $900,000 and $2,100,000, respectively.
Determine the cost to be apportioned to the land and to the building and prepare the journal entry to record the acquisition.

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Definitions:

Shareholders

Individuals or entities that own shares in a corporation, making them part owners of the company with certain rights and responsibilities.

Proxy

A person authorized to act on behalf of another, especially in voting at a meeting or in corporate matters.

Agency

A relationship where one party (the agent) is authorized to act for another (the principal) in dealings with third parties.

Voting Trusts

Legal arrangements used to combine the voting power of shareowners by temporarily transferring their shares to a trustee, often used to control corporations.