Semtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Semtech made the following expenditures in connection with the purchase of the land and building:

Title insurance $ 21,000

Legal fees for drawing the contract 7,500

Pro-rated property taxes for the period after acquisition 41,000

State transfer fees 4,500

An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.9 and $1.1 million, respectively. Shortly after acquisition, Semtech spent $87,000 to construct a parking lot and $45,000 for landscaping.

Required:

1. Determine the initial valuation of each asset Semtech acquired in these transactions. (Enter your answers in whole dollars

Assets Initial Valuation

Land-

Building -

Land Improvements-

2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Semtech demolished the building. Demolition costs were $300,000 and the salvaged materials were sold for $8,500. In addition, Semtech spent $84,000 clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.)

Assets Initial Valuation

Land-

Building -

Land Improvements-