Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price$177,000?Real estate commissions 15,200?Legal fees 1000?Expenses of clearing the land 2200?Expenses to remove old building 1200? What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?
A. $192,200 to Land; $4400 to Building.
B. $195,400 to Land; $0 to Building.
C. $196,600 to Land; $0 to Building.
D. $193,200 to Land; $1200 to Building.
E. $178,000 to Land; $19,600 to Building.
Answer: C
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