On January 1, Mitzu Company pays a lump sum amount of $2,800,000 for land, Buildong 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 $823,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $335,500 and is expected to last another 11 years with no salvage value. The land is valued at $1,891,000. The company also incurs the following additional costs.

Cost to demolish Building 1

Cost of additional land grading

Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value

Cost of new Land Improvements 2, having a 20 year useful life and no salvage value

Required:

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

On January 1, Mitzu Company pays a lump-sum amount of $2,800,000 for land, Bullding 1, Bullding 2, and Land improvements 1 Puilding 1 has no value and will be demolished. Building 2 will be an office and is appraised at $823,500, with a usefuil life of 20 years and a $85,000 salvage value. Land improvements 1 is valued at $335.500 and is expected to last another 11 years with no salvage value. The land is valued at $1,891,000. The company also incurs the following additional costs Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column