by BEE last October of 2015 for $1,750,000, and the building was constructed on February of 2016 for $4,000,000. The fair values of the land and building on the date of acquisition are $1,100,000 and $1,650,000, respectively. How much is allocated to land and building upon acquisition? *
by BEE last October of 2015 for $1,750,000, and the building was constructed on February of 2016 for $4,000,000. The fair values of the land and building on the date of acquisition are $1,100,000 and $1,650,000, respectively. How much is allocated to land and building upon acquisition? *
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On Nov. 5, 2019, AYE Company purchased a land and a building for a lump-sum amount of $5,500,000 from BEE Corporation. The land was purchased by BEE last October of 2015 for $1,750,000, and the building was constructed on February of 2016 for $4,000,000. The fair values of the land and building on the date of acquisition are $1,100,000 and $1,650,000, respectively. How much is allocated to land and building upon acquisition? *
A. Land - $2,200,000; Building - $3,300,000
B. Land - $0; Building - $5,500,000
C. Land - $2,750,000; Building - $2,750,000
D. Land - $5,500,000; Building - $0
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