On January 1, Mitzu Company 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 $720,000, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $540,000 and is expected to last another 18 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