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 $854,000, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $244,000 and is expected to last another 8 years with no salvage value. The land is valued at $1,952,000. The company also incurs the following additional costs.

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Cost to demolish Building 1	$	346,400
Cost of additional land grading		193,400
Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value		2,262,000
Cost of new Land Improvements 2 having a 20-year useful life and no salvage value		173,000

1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

Allocation of purchase price Appraised Value Percent of Total Appraised Value X Total cost of acquisition = Apportioned Cost $ 64% Land Building 2 Land Improvements 1 Totals 1,952,000 854,000 244,000 3,050,000 28% X 8% X 100% $ 2,750,000 2,750,000 2.750,000 $ $ Land Building 2 Building 3 Land Improvements 1 Land Improvements 2 Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals 0 $ 0 $ 0 $ 0 $ 0