Industrial Metals purchases land, building, and equipment together for $1.2 million. The estimated fair values of the land, buildings, and equipment are $500,000, $800,000, and $200,000, respectively. What amount should be recorded in the separate account for the land?

A. $500,000
B. $650,000
C. $400,000
D. $350,000

C. $400,000

Explanation:

The amount that should be recorded in respect of land shall be determined through the following mentioned method:

Amount of land=Purchased amount of land, building and equipment* [Fair value of land/Estimated fair values of the land, buildings, and equipment}

Amount of land=$1,200,000*[$500,000/$500,000+$800,000+$200,000]

                         =$1,200,000*[$500,000/$1,500,000]

                          =$400,000

So based on the above calculations, the answer is C. $400,000

answer; hazards;