Required information

[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 $750,000, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to last another 14 years with no salvage value. The land is valued at $1,830,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$ 344,400
Cost of additional land grading	185,400
Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value	2,242,000
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value	168,000

Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

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

3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use.

Allocation of Purchase Price	Appraised Value	Percent of Total Appraised Value		Total cost of acquisition	=	Apportioned Cost
Land	$1,830,000			$2,700,000	=
Building 2	750,000			2,700,000	=
Land Improvements 1	420,000			2,700,000	=
Totals	$3,000,000	0%				$0
	Land	Building 2		Building 3		Land Improvements 1	Land Improvements 2
Purchase Price
Demolition
Land grading
New building (Construction cost)
New improvements
Totals	$0	$0		$0		$0	$0