Problem 8-3A (Algo) Asset cost allocation; straight-line depreciation LO C1, P1 [The following information applies to the questions displayed below.) 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 $640,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements is valued at $518,500 and is expected to last another 17 years with no salvage value. The land is valued at $1,891,000. The company also incurs the following additional costs. Cost to demolish Building 1 $ 338,400 cost of additional land grading 193,400 Cost to construct Building 3, having a useful life of 25 years and a $398,000 salvage value 2,262,000 cost of new Land improvements 2, having a 20-year useful life and no salvage value 168,000 Problem 8-3A (Algo) Part 3 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use No Date 1 December 31 General Journal Depreciation expense Building 2 Accumulated depreciation-- Building 2 Credit Debit 27.775 27.775 % 2 December 31 Depreciation expense Building 3 Accumulated depreciation--Bulding 3 74 560 74,560 3 December 31 Depreciation expense-Land improvements 1 Accumulated depreciation - Land improvements 1 30,500 3 30,500 4 December 31 Depreciation expenseland improvements 2 Accumulated depreciation-Land improvements 2 8.400 8,400