Question: On June 30 2014 Macrosoft Company acquired a 10 acre tract

On June 30, 2014, Macrosoft Company acquired a 10-acre tract of land. On the tract was a warehouse that Macrosoft intended to use as a distribution center. At the time of purchase, the land had an assessed tax value of $6,300,000, and the building had an assessed tax value of $11,200,000. Macrosoft paid $15,000,000 for the land and building. After the purchase, the company paid $1,000,000 to have various modifications made to the building.

1. At what amount should Macrosoft record the land and building?
2. For financial reporting purposes, why might Macrosoft managers prefer to assign a larger portion of the $15,000,000 to the land rather than to the building?

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  • CreatedSeptember 10, 2014
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