Required information Problem 10-3A Asset cost allocation; straight-line depreciation LO C1, P1 (The following information applies to the questions displayed below.) On January 1, Mitzu Co. pays a lump-sum amount of $2,600,000 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 $644,000, with a useful life of 20 years and a $60,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,736,000. The company also incurs the following additional costs. $ 328,400 175, 480 Cost to demolish Building 1 Cost of additional land grading Cost to construct Building 3, having a useful life of 25 years and a $392,800 salvage value Cost of new Land Improvements 2 having a 20-year useful life and no salvage value 2,202,800 164,000 Problem 10-3A Part 1 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Allocation of Purchase Price Appraised Value Total Cost of Acquisition Apportioned Cost ook Land Building 2 Land Improvements 1 Totals Porcent of Total Appraised Value 62% X 23% X 15% x 100% 1,736,000 644,000 420,000 2,800,000 Tint $ 2,600,000 2,600,000 2,600,000 1,612,000 598,000 390,000 2,600,000 rences $ Land Building 2 Building 3 Land Land Improvements 1 Improvements 2 Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals $ 0 $ 0 $ 0 $ 0 $ 3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use. Answer is complete but not entirely correct. No Dato Deblt Credit 1 Dec 31 General Journal Depreciation expense Building 2 Accumulated depreciation Building 2 26,900 26,900 2 Dec 31 Depreciation expense-Building 3 Accumulated depreciation Building 3 72,400 72,400 3 Dec 31 Depreciation expense--Land improvements 1 Accumulated depreciation -Land improvements 1 47,116 47.116 4 Dec 31 Depreciation expense-Land improvements 2 Accumulated depreciation-Land improvements 2 8,200 8.200