lated deplav analyst nting Ethics Case Linda Tristan, assistant controller for Ag-Growth, Inc., a biotechnolog concerns about the accounting analysis for the firm's purchase of a land site and building K-7. Accounting Ethi has firm, from Hylite Co dum Land for used laboratory facility, i te Corporation. The price for this package purchase was $1,800,000 cash. A memoran m the controller, Greg Fis ter, stated that the journal entry for this purchase should debit r $1,350,000, debit Building for $450,000, and credit Cash for $1,800,000. The building, a The source documents supporting the transaction include two appraisals of the property, one done for Ag-Growth and one done for Hylite Corporation. The appraisal for Ag-Growth valued the land at $1,000,000 and the building at $500,000. The appraisal for Hylite Corporation (done by a different appraiser) valued the land at $1,500,000 and the building at $750,000. Negotiations between the two firms finally settled on an overall price of $1,800,000 for the land and the building Tristan asked Fister how he arrived at the amounts to be recorded for the land and building since each appraisal valued the land at only twice the building's value. "Well," replied Fister, "I used the $1,500,000 land value from Hylite's appraiser and the $500,000 building value from our appraiser That relationship shows the land to be worth three times the building's value. Using that relation- ship. lassigned 75 percent of our actual purchase price of $1.800,000to the land and 25 percent of the purchase price to the building. But why do it that way?" asked Tristan