ABC Limited purchased land and two pieces of machinery for a lump sum price of $450,000. At the time of purchase, appraisals were obtained for the assets acquired:\ Appraised Value\ Land\ Machine A\ Machine B\ Total\ \ $\ 350,000\ 100,000\ 50,000\ 500,000\ 1) What will be the capitalized "cost" of each asset when the purchase is recorded? [2 marks]\ 2) What incentive would there be for management to allocate more "cost" towards land (and less towards the two machines)?\ a. Land does not depreciate, so allocating more cost towards land will increase profitability.\ b. Land depreciates, so allocating more cost towards land will increase profitability.\ C.\ If land is later sold for more than its "cost", a larger gain will be recorded which will increase profitability.\ d. If land is later sold for less than its "cost" , a larger gain will be recorded which will increase profitability.\ Land\ Machine A\ Machine B\ a.\ $315,000\ $ 45,000\ $90,000\ b.\ $315,000\ $ 90,000\ $45,000\ C.\ $350,000\ $100,000\ $50,000\ d.\ $350,000\ $50,000\ $100,000\ 3) Which of the following would not be included in the "cost" recorded on the Balance Sheet for a capital asset?\ a) Provincial Sales Tax (PST)\ b) Goods & services tax (GST)\ C)\ Installation cost\ d) Shipping costs\ 4) Depreciation is a cost allocation method and has nothing to do with determining an asset's market value.\ a) True\ b) False\ 11