1, Mitzu Company pays a lump-sum amount of $2,600,000 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 $720,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $540,000 and is expected to last another 18 years with no salvage value. The land is valued at $1,740,000. 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 Problem 10-3A (Algo) Part 1 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) $ $ Appraised Value $ 1,740,000 720,000 540,000 3,000,000 Land 1,508,000 342,400 189,400 Percent of Total Appraised Value 58% X 24% X 18% X 100% Building 2 < Prev Total cost of acquisition $ 2,600,000 2,600,000 2,600,000 Building 3 4 5 6 = = = of 11 $ $ Apportioned Cost Land Improvements 1 www www HH Next > $ 342,400 189,400 2,202,000 168,000 1,508,000 624,000 468,000 2,600,000 Land Improvements 2
1, Mitzu Company pays a lump-sum amount of $2,600,000 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 $720,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $540,000 and is expected to last another 18 years with no salvage value. The land is valued at $1,740,000. 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 Problem 10-3A (Algo) Part 1 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) $ $ Appraised Value $ 1,740,000 720,000 540,000 3,000,000 Land 1,508,000 342,400 189,400 Percent of Total Appraised Value 58% X 24% X 18% X 100% Building 2 < Prev Total cost of acquisition $ 2,600,000 2,600,000 2,600,000 Building 3 4 5 6 = = = of 11 $ $ Apportioned Cost Land Improvements 1 www www HH Next > $ 342,400 189,400 2,202,000 168,000 1,508,000 624,000 468,000 2,600,000 Land Improvements 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
A13
Transcribed Image Text:On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 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 $720,000,
with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $540,000 and is expected to
last another 18 years with no salvage value. The land is valued at $1,740,000. 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
Problem 10-3A (Algo) Part 1
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)
$
$
$
Appraised
Value
1,740,000
720,000
540,000
3,000,000
Land
1,508,000
342,400
189,400
Percent of
Total
Appraised
Value
58% X
24% X
18% X
100%
Building 2
X
< Prev
Total cost of
acquisition
$ 2,600,000
2,600,000
2,600,000
4
Building 3
S5
6
=
=
II
=
=
of 11
$
$
Apportioned Cost
Land
Improvements 1
Next >
$ 342,400
189,400
2,202,000
168,000
1,508,000
624,000
468,000
2,600,000
Land
Improvements 2
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