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 $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.
THANK YOU SO MUCH WHOEVER ANSWERS. HELP ASAP
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
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