Reference no: EM133011767
Question - On April 1, 20x1, ESCULENT EDIBLE Co. purchased land and building by paying 40,000,000 and assuming a mortgage of 8,000,000. The land and building have appraised values of 20,000,000 and 40,000,000, respectively. The building will be used by ESCULENT Co. as its new office.
Additional costs relating to the purchase include the following:
Legal cost of conveying and registering title to land 32,000
Payment to tenants to vacate premises 36,000
Option paid on the land and building 24,000
Option paid on similar land and building not acquired 12,000
Broker's fee on the land and building 60,000
Unpaid real estate taxes prior to April 1, 20x1 assumed by ESCULENT Co. - assessed on land 120,000
Real estate taxes after April 1, 20x1 80,000
Repairs and renovation costs before the building is occupied 160,000
Repair costs after the building is occupied 200,000
Required -
1. How much is the cost of the land?
a. 16,192,000 b. 17,292,000 c. 15,492,000 d. 14,592,000
2. How much is the cost of the building?
a. 23,420,000 b. 32,640,000 c. 32,240,000 d. 24,440,000