Tonto Company purchased property for $140,000. The property included a building, equipment and land. The building was appraised at $78,000, the land at $53,000, and the equipment at $26,000. What is the amount of cost to be allocated to the building in the accounting records

$69,554

Explanation:

The building is recorded in the accounting records at book value. The total cost is apportioned on the basis of the appraised value ratio of each.

Total appraised value = $78,000 + $53,000 + $26,000 = $157,000

Value of building in the records = Total book value x appraised ratio of building

Value of building in the records = $140,000 x ($78,000 / $157,000)

Value of building in the records = $140,000 x 0.4968

Value of building in the records = $69,554.14

u = 30

continuing your method

= +

subtract from both sides

= - thus

= -

= ⇒ u = 30