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 $810,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $330,000 and is expected to last another 11 years with no salvage value. The land is valued at $1,860,000. 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 $398,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value $ 343,400 189,400 2,282,000 168,000 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 Total cost of acquisition $ 1,860,000 x Land Building 2 Land Improvements 1 Totals $ 1,860,000 0% x = = = Apportioned Cost $ 0 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 $810,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $330,000 and is expected to last another 11 years with no salvage value. The land is valued at $1,860,000. 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 $398,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value $ 343,400 189,400 2,282,000 168,000 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 Total cost of acquisition $ 1,860,000 x Land Building 2 Land Improvements 1 Totals $ 1,860,000 0% x = = = Apportioned Cost $ 0
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To allocate the costs incurred by Mitzu to the appropriate categories we first need to calculate the ... View the full answer
Related Book For
Financial Accounting Information For Decisions
ISBN: 9781260705584
10th Edition
Authors: John J. Wild
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