On January 1, Mitzu Company pays a lump-sum amount of $2,800,000 for land, Building 1, Building...
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On January 1, Mitzu Company pays a lump-sum amount of $2,800,000 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 $671,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $549,000 and is expected to last another 18 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 Cost of additional land grading Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Allocation of Purchase Price Land Building 2 Land Improvements 1 Totals Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Appraised Value Land Percent of Total Appraised Value Building 2 X X X Total cost of acquisition Building 3 11 Apportioned Cost Land Improvements 1 $ 345,400 193,400 2,202,000 168,000 Land Improvements 2 On January 1, Mitzu Company pays a lump-sum amount of $2,800,000 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 $671,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $549,000 and is expected to last another 18 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 Cost of additional land grading Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Allocation of Purchase Price Land Building 2 Land Improvements 1 Totals Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Appraised Value Land Percent of Total Appraised Value Building 2 X X X Total cost of acquisition Building 3 11 Apportioned Cost Land Improvements 1 $ 345,400 193,400 2,202,000 168,000 Land Improvements 2
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Related Book For
Financial Accounting Information For Decisions
ISBN: 9781260705584
10th Edition
Authors: John J. Wild
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