Problem: Crane Farms purchased real estate for $1,190,000, which included $4.100 in legal fees. It paid $265,000 cash and incurred a mortgage payable for the balance. The real estate included land that was appraised at $488,160, a building appraised at $745,800, and fences and other land improvements appraised at $122,040. The building has an estimated useful life of 60 years and a $56,000 residual value. Land improvements have an estimated 15-year useful life and no residual value.
(a) Calculate the cost that should be allocated to each asset purchased.
- Land
- Building
- Land Improvements