On January 1, Mitzu Co. pays a lump-sum amount of $2,700,000 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 $600,000, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $510,000 and is expected to last another 17 years with no salvage value. The land is valued at $1,890,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$	345,400
Cost of additional land grading		187,400
Cost to construct Building 3, having a useful life of 25 years and a $398,000 salvage value		2,262,000
Cost of new Land Improvements 2 having a 20-year useful life and no salvage value		178,000

Journal entry worksheet

Record de cost of the plant asset, paid in cash