Problem 10-3A (Algo) Asset cost allocation; straight-line depreciation LO C1, P1

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On January 1, Mitzu Company pays a lump-sum amount of $2,750,000 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 $762,500, with a useful life of 20 years and a $70,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to last another 17 years with no salvage value. The land is valued at $1,769,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$ 339,400
Cost of additional land grading	193,400
Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value	2,242,000
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value	178,000

Problem 10-3A (Algo) Part 2

2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.

1- (Journal entry worksheet

Record the cost of the plant assets, paid in cash.)