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 $750,000, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to last another 14 years with no salvage value. The land is valued at $1,830,000. 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 $ 339,400 193,400 2,302,000 178,000 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 Total cost of acquisition Value Land $ 1,830,000 61% $ 2,700,000 = $ Building 2 Land Improvements 1 750,000 420,000 25% Totals $ 3,000,000 14% x 100% 2,700,000 2,700,000 = = Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Apportioned Cost 1,647,000 675,000 378,000 2,700,000 Land Building 2 Building 3 Land Improvements 1 Land Improvements 2 0 $ 0 $ 0 $ 0 $ 0