Safari Corporation has acquired a property that included both land and a building for $500,000
The corporation paid cash. The corporation hired an appraiser who has determined that the market value of the land is $300,000 and that of the building is $400,000. Journalize the lump-sum purchase.
What will be an ideal response
Land 214,286
Building 285,714
Cash 500,000 .Cost of land = $500,000 (lump-sum purchase price) x [$300,000 (land) / ($300,000 (land) + $400,000 (building))] = $214,286
Cost of building = $500,000 (lump-sum purchase price) x [$400,000 (building) / ($300,000 (land) + $400,000 (building))] = $285,714
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