On January 1, Mitzu Company pays a lump-sum amount of $2,700,000 for land, Building 1, Building...

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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 $690,000, with a useful life of 20 years and a $80,000 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 $1,800,000. 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 $ 343,400 187,400 2,222,000 168,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Percent of Allocation of Purchase Price Appraised Value Total Appraised Value x Total cost of acquisition Land $ 1,800,000 60% X $ 2,700,000 $ Building 2 690,000 26% X Land Improvements 1 510,000 14% x 2,700,000 2,700,000 = = Totals $ 3,000,000 100% $ Apportioned Cost 1,620,000 702,000 378,000 2,700,000 Land Building 2 Building 3 Purchase Price $ 1,620,000 $ 579,000 $ Land Improvements 1 510,000 Land Improvements 2 Demolition Land grading 187,400 New building (Construction cost) New improvements Totals 2,222,000 168,000 $ 1,807,400 $ 579,000 $ 2,222,000 $ 510,000 $ 168,000 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 $690,000, with a useful life of 20 years and a $80,000 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 $1,800,000. 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 $ 343,400 187,400 2,222,000 168,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Percent of Allocation of Purchase Price Appraised Value Total Appraised Value x Total cost of acquisition Land $ 1,800,000 60% X $ 2,700,000 $ Building 2 690,000 26% X Land Improvements 1 510,000 14% x 2,700,000 2,700,000 = = Totals $ 3,000,000 100% $ Apportioned Cost 1,620,000 702,000 378,000 2,700,000 Land Building 2 Building 3 Purchase Price $ 1,620,000 $ 579,000 $ Land Improvements 1 510,000 Land Improvements 2 Demolition Land grading 187,400 New building (Construction cost) New improvements Totals 2,222,000 168,000 $ 1,807,400 $ 579,000 $ 2,222,000 $ 510,000 $ 168,000