Question

Sammy Corporation acquired an office building on two acres of land for a lump-sum price of...

Sammy Corporation acquired an office building on two acres of land for a lump-sum price of $800,000. The building was completely furnished. According to independent appraisals, the fair values were $500,000, $300,000, and $200,000 for the building, land, and furniture, respectively. What should be the amount of initial value for the land?

Homework Answers

Answer #1

Initial value for the land = $240,000

Explanation

Asset Fair Value Percent of Total Initial Valuation
Fair Value (Percentage x $800,000)
Building         500,000.00 50%                        400,000.00
Land      300,000.00 30% 240,000.00
Furniture         200,000.00 20%                        160,000.00
Total      1,000,000.00 100%                        800,000.00
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