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Pinewood Company purchased two buildings on four acres of land. The lump-sum purchase price was $2,000,000. According to independent appraisals, the fair values were $840,000 (building A) and $525,000 (building B) for the buildings and $735,000 for the land. Required: Determine the initial valuation of the buildings and the land.

Asset Initial Valuation

Land

Building A

Building B

Total

Respuesta :

Parrain

Answer:

Initial Assets Valuation

  • Building A = $800,000
  • Building B = $500,000
  • Land = $700,000

Explanation:

According to the Independent Appraisal, the total value of the buildings and the land would be;

= 840,000 + 525,000 + 735,000

= $2,100,000

The initial valuation of the Assets therefore will be their weights according to the independent appraisal multiplied by the purchase price.

Building A

= [tex]\frac{840,000}{2,100,000} * 2,000,000[/tex]

= $800,000

Building B

= [tex]\frac{525,000}{2,100,000} * 2,000,000[/tex]

= $500,000

Land

= [tex]\frac{735,000}{2,100,000} * 2,000,000[/tex]

= $700,000

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