Dorsey Co. has expanded its operations by purchasing a parcel of land with a building on it from Bibb Co. for $91,000. The appraised

value of the land is $25,000, and the appraised value of the building is $91,000.

Required:

a. Assuming that the building is to be used in Dorsey Co.'s business activities, what cost should be recorded for the land?

b. Indicate why, for income tax purposes, management of Dorsey Co. would want as little of the purchase price as possible allocated

to land.

c. 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.

d. 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?

Required A Required B Required Required D Assuming that the building is to be used in Dorsey Co.'s business activities, what cost should be recorded for the land? (Round final answer to the nearest whole dollar amount.) Cost of land Required B > Required A Required B Required C Required D Indicate why, for income tax purposes, management of Dorsey Co. would want as little of the purchase price as possible allocated to land. (Select all that apply.) OOOOO Land is a current asset. Land is not a depreciable asset. Land value will not reduce taxable income Land is a depreciable asset. Land value reduces taxable income. Required A Required B Required c Required D 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. Appraised values are to be used because they represent the book value. O Appraised values are to be used because they represent the asset's current value, O Appraised values are to be used because they represent the historical asset value Required A Required B Required Required D 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? Cost of land (Required C Required