Riverboat Adventures pays $480,000 plus $19,000 in closing costs to buy out a co

Question

Riverboat Adventures pays $480,000 plus $19,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $102,000, a building appraised at $204,000, and paddleboats appraised at $204,000. Compute the cost that should be allocated to the building.

$192,000.

$199,600.

$204,000.

$281,200.

$122,400.

Riverboat Adventures pays $480,000 plus $19,000 in closing costs to buy out a competitor. The real estate consists of land appraised at $102,000, a building appraised at $204,000, and paddleboats appraised at $204,000. Compute the cost that should be allocated to the building.

$192,000.

$199,600.

$204,000.

$281,200.

$122,400.

Explanation / Answer

Cost that should be allocated to the building is 199600.

It is calculated as follows:-

(480000 + 19000) 204000

X

( 102000+204000+204000)

= 499000 204000

X   

510000

= $199600

closing costs are capitalised.

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