On January 1, Mitzu Company 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 $737,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $472,000 and is expected to last another 16 years with no salvage value. The land is valued at $1,740,500. The company also incurs the following additional costs. Cost to demolish Building 1 $ 346,400 Cost of additional land grading 189,400 Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value 2,222,000 Cost of new Land Improvements 2, having a 20-year useful life and no salvage value 173,000 Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
On January 1, Mitzu Company 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 $737,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $472,000 and is expected to last another 16 years with no salvage value. The land is valued at $1,740,500. The company also incurs the following additional costs. Cost to demolish Building 1 $ 346,400 Cost of additional land grading 189,400 Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value 2,222,000 Cost of new Land Improvements 2, having a 20-year useful life and no salvage value 173,000 Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, Mitzu Company 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 $737,500, with a useful life of 20 years and a $85,000 salvage value. Land Improvements 1 is valued at $472,000 and is expected to last another 16 years with no salvage value. The land is valued at $1,740,500. The company also incurs the following additional costs.
| Cost to demolish Building 1 | $ 346,400 |
|---|---|
| Cost of additional land grading | 189,400 |
| Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value | 2,222,000 |
| Cost of new Land Improvements 2, having a 20-year useful life and no salvage value | 173,000 |
Prepare a single
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