Can please get help with practice question 5.6 with a quick explaination of how?Required informationSkip to question [The following information applies to the questions displayed below.]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 $780,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $360,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,860,000. The company also incurs the following additional costs.Cost to demolish Building 1$ 348,400Cost of additional land grading195,400Cost to construct Building 3, having a useful life of 25 years and a $398,000 salvage value2,242,000Cost of new Land Improvements 2, having a 20-year useful life and no salvage value168,000 Required:1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Allocation of Purchase PriceLandBuilding 2Land Improvements 1TotalsPurchase PriceDemolitionLand gradingNew building (Construction cost)New improvementsTotalsAppraisedValue$$Land0Percent ofTotalAppraisedValue0 $0%Building 2XXXX0Total cost ofacquisition$Building 30$Apportioned CostLandImprovements 1$0LandImprovements 20 $0

Preparing a statement showing apportionment of lump sum amount paid to acquire the assets as…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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[The following information applies to the questions displayed below.]

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 $780,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $360,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,860,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$ 348,400
Cost of additional land grading	195,400
Cost to construct Building 3, having a useful life of 25 years and a $398,000 salvage value	2,242,000
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value	168,000

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
0
Percent of
Total
Appraised
Value
0 $
0%
Building 2
X
X
X
X
0
Total cost of
acquisition
$
Building 3
0
$
Apportioned Cost
Land
Improvements 1
$
0
Land
Improvements 2
0 $
0

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