If your company purchases land and a building for $100,000, and it intends to tear...
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Accounting
If your company purchases land and a building for $100,000, and it intends to tear down the existing building to allow construction of a new warehouse, the purchase price should be allocated to the following accounts:
A) $100,000 to the Construction Expense account
B) $100,000 to the Land account and $0 to the Building account
C) Prorated to the Land account and Building account based on the appraised values of each.
D) $100,000 to the Building account and $0 to the Land account
PLEASE EXPLAIN, THANKS IN ADVANCE,
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