Accounting Practice Problem 5

5 [The following information applies to the questions displayed below.] On January 1, Mitzu Co. pays a lump-sum amount of $2,650,000 for land, Building 1, Building 2, and Land Improvements 1. Part 2 of 3 Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $678,500, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $413,000 and is expected to last another 14 years with no salvage value. The land is valued at $1,858,500. The company also incurs the following additional costs. 3.33 points Cost to demolish Building 1 $ 346 , 400 Cost of additional land grading 191, 400 Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value 2, 242, 000 eBook Cost of new Land Improvements 2 having a 20-year useful life and no salvage value 168 , 000 References 2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1. View transaction list Journal entry worksheet Record the cost of the plant assets, paid in cash. Note: Enter debits before credits. K Mc Graw