Staples Company bought an office building for $15,000,000 so it could consolidate its entire senior management staff in one location. An independent appraiser valued these items individually as follows
PPE category Appraised value
Land …………………………………………… $ 5,600,000
Building ………………………………………..6,500,000
Computer network system ……………………..1,100,000
Elevator system ………………………………..2,400,000
Landscaping and site improvements ………….. 900,000
Total …………………………………………… $16.500.000
Prior to completing the purchase, Staples’ management decided that it will remove the computer network system and replace it with fiber-optic cables and related technologies.
Required:
Allocate the purchase price among the assets acquired.