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The amount of the purchase price that should be allocated to the cost of the land.
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Answer to Problem 1QC
The amount of the purchase price that should be allocated to the cost of the land is option a. $850,000.
Explanation of Solution
Plant assets:
Plant assets refer to the fixed assets, having a useful life of more than a year that is acquired by a company to be used in its business activities, for generating revenue.
Calculate the amount of the purchase price that should be allocated to the cost of the land:
From the above calculation, it is clear that $850,000 is the amount of purchase price that should be allocated to the cost of the land. Hence, the option b. $1,100,000, option c. $566,667, and option d. None of the above are the incorrect answers.
Therefore, option a. is the correct answer.
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Chapter 7 Solutions
Financial Accounting (11th Edition)
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