Required information

Problem 8-3A 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 $2,650,000 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 $701,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to last another 17 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	$	340,400
Cost of additional land grading		187,400
Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value		2,262,000
Cost of new Land Improvements 2 having a 20-year useful life and no salvage value		178,000

Problem 8-3A Part 1

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

Problem 8-3A Part 1 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Allocation of purchase price Appraised Value Percent of Total Appraised Value Total cost of acquisition = Apportioned Cost Land Building 2 Land Improvements 1 Totals Land Building 2 Building 3 Land Improvements 1 Land Improvements 2 Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals