Dorsey co. has expanded its operations by purchasing a parcel of land with a building on it from bibb co. for $98,000. the appraised value of the land is $30,000, and the appraised value of the building is $102,000. required: assuming that the building is to be used in dorsey co.’s business activities, what cost should be recorded for the land? indicate why, for income tax purposes, management of dorsey co. would want as little of the purchase price as possible allocated to land. indicate why dorsey co. allocated the cost of assets acquired based on appraised values at the purchase date rather than on the original cost of the land and building to bibb co. assuming that the building is demolished at a cost of $11,000 so that the land can be used for employee parking, what cost should dorsey co. record for the land?

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation: