1.Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building:

Title insurance$23,000Legal fees for drawing the contract8,500Pro-rated property taxes for the period after acquisition43,000State transfer fees4,700

An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $2 million, respectively. Shortly after acquisition, Samtech spent $89,000 to construct a parking lot and $47,000 for landscaping.

Required:a.Determine the initial valuation of each asset Samtech acquired in these transactions.(Enter your answers in whole dollars.)

b.Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $320,000 and the salvaged materials were sold for $9,500. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.

2. Cedric Company recently traded in an older model computer for a new model. The old model's book value was $333,000 (original cost of $723,000 less $390,000 in accumulated depreciation) and its fair value was $370,000. Cedric paid $77,000 to complete the exchange which has commercial substance.

Required:Prepare the journal entry to record the exchange.

3.On June 30, 2016, Kimberly Farms purchased custom-made harvesting equipment from a local producer. In payment, Kimberly signed a noninterest-bearing note requiring the payment of $68,000 in two years. The fair value of the equipment is not known, but an6% interest rate properly reflects the time value of money for this type of loan agreement. (FV of $1,PV of $1,FVA of $1,PVA of $1,FVAD of $1andPVAD of $1)(Use appropriate factor(s) from the tables provided.)

At what amount will Kimberly initially value the equipment?

How much interest expense will Kimberly recognize in its income statement for this note for the year ended December 31, 2016?