On January 1, Mitzu Company pays a lump-sum amount of $2,650,000 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 $678,500, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $531,000 and is expected to last another 18 years with no salvage value. The land is valued at $1,740,500. The company also incurs the following additional costs. Cost to demolish Building 1 $ 342,400 Cost of additional land grading 187,400 Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value 2,262,000 Cost of new Land Improvements