Makemore Company Purchases a Factory for $800,000

question 68

Multiple Choice

Makemore Company purchases a factory for $800,000. The purchase price is properly allocated 90% to the building and 10% to the land. In the first year, Makemore adds a storage shed to the building at a cost of $8,000. The utility company pays Makemore $1,500 for an easement to run utility lines across the land. A total depreciation of $45,000 is deducted over the 3 years. Determine the adjusted basis of the building and the land as of the end of year 3:

• A)$728,000 building; $78,500 land
• B)$683,000 building; $80,000 land
• C)$683,000 building; $78,500 land
• D)$728,000 building; $80,000 land

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Definitions:

Hereditary Factors

relate to the traits and characteristics that are passed from parents to their offspring through genes.

Mentally Ill

A term referring to individuals who experience significant psychological disorders that affect their thinking, feeling, mood, and behavior.

Pleasant Living Conditions

Environmental and social circumstances that contribute to one's comfort and overall happiness.

Pinel

Refers to Philippe Pinel, a French physician credited with laying the foundation of modern psychiatry by advocating for humane treatment of the mentally ill.