Land with a building on it is bought for $2,000,000 at a time when the market value of the land is $1,000,000 and the market value of the building is $400,000. Which of the following is correct?

Multiple Choice

• None of the other alternatives are correct

• Each asset would be set up at $1,000,000

• No depreciation will be taken on the building until such time as the market value drops below book value

• The two assets would be recorded at $1,000,000 and $400,000respectively

• The assets would be shown together on the balance sheet as a single asset "Land & Building" at $2,000,000