! Required information [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 $690,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $570,000 and is expected to last another 19 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 useful life of 25 years and a $402,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value $ 341,400 195,400 2,282,000 178,000 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 Land Building 2 × Land Improvements 1 Totals Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals $ 0 0% Land = = = $ Apportioned Cost Building 2 Building 3 Land Improvements 1 Land Improvements 2 0 $ 0 $ 0 $ 0 $ 0 $ 0
! Required information [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 $690,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $570,000 and is expected to last another 19 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 useful life of 25 years and a $402,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value $ 341,400 195,400 2,282,000 178,000 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 Land Building 2 × Land Improvements 1 Totals Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals $ 0 0% Land = = = $ Apportioned Cost Building 2 Building 3 Land Improvements 1 Land Improvements 2 0 $ 0 $ 0 $ 0 $ 0 $ 0
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.8AMCP
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![!
Required information
[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 $690,000,
with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $570,000 and is expected to
last another 19 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 useful life of 25 years and a $402,000 salvage value
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
$ 341,400
195,400
2,282,000
178,000
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
Land
Building 2
×
Land Improvements 1
Totals
Purchase Price
Demolition
Land grading
New building (Construction cost)
New improvements
Totals
$
0
0%
Land
=
=
=
$
Apportioned Cost
Building 2
Building 3
Land
Improvements 1
Land
Improvements 2
0
$
0 $
0 $
0
$
0 $
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F879bc6d7-006b-4909-9103-c906fb77766e%2F3ae8e7ed-4a6f-4784-8728-ba25e123e4d8%2Fx5c4nxx_processed.png&w=3840&q=75)
Transcribed Image Text:!
Required information
[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 $690,000,
with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $570,000 and is expected to
last another 19 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 useful life of 25 years and a $402,000 salvage value
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
$ 341,400
195,400
2,282,000
178,000
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
Land
Building 2
×
Land Improvements 1
Totals
Purchase Price
Demolition
Land grading
New building (Construction cost)
New improvements
Totals
$
0
0%
Land
=
=
=
$
Apportioned Cost
Building 2
Building 3
Land
Improvements 1
Land
Improvements 2
0
$
0 $
0 $
0
$
0 $
0
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