Question
On January 1, Mitzu Co. pays a lump-sum amount of $2,750,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no
On January 1, Mitzu Co. pays a lump-sum amount of $2,750,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $540,000, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $720,000 and is expected to last another 24 years with no salvage value. The land is valued at $1,740,000. The company also incurs the following additional costs.
Cost to demolish Building 1 | $ | 339,400 | |
Cost of additional land grading | 187,400 | ||
Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value | 2,202,000 | ||
Cost of new Land Improvements 2 having a 20-year useful life and no salvage value | 168,000 | ||
Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started