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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 $2,600,000 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 $671,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $457,500 and is expected to last another 15 years with no salvage value. The land is valued at $1,921,500. 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 $ 340,400 191,400 2,262,000 178,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Answer is not complete. Percent of Allocation of Purchase Price Appraised Value Total Appraised Value Total cost of acquisition Land $ 1,921,500 x $ 2,600,000 Building 2 Land Improvements 1 671,000 457,500 x 2,600,000 = x 2,600,000 = Totals $ 3,050,000 0% Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Apportioned Cost Land Building 2 Building 3 Land Improvements Land Improvements 2 S 0 $ 0 S 0 S 0 $ 0

Required information [The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 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 $671,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $457,500 and is expected to last another 15 years with no salvage value. The land is valued at $1,921,500. 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 $ 340,400 191,400 2,262,000 178,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Answer is not complete. Percent of Allocation of Purchase Price Appraised Value Total Appraised Value Total cost of acquisition Land $ 1,921,500 x $ 2,600,000 Building 2 Land Improvements 1 671,000 457,500 x 2,600,000 = x 2,600,000 = Totals $ 3,050,000 0% Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Apportioned Cost Land Building 2 Building 3 Land Improvements Land Improvements 2 S 0 $ 0 S 0 S 0 $ 0

Financial Accounting: The Impact on Decision Makers
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 $2,600,000 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 $671,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $457,500 and is expected to last another 15 years with no salvage value. The land is valued at $1,921,500. 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 $ 340,400 191,400 2,262,000 178,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Answer is not complete. Percent of Allocation of Purchase Price Appraised Value Total Appraised Value Total cost of acquisition Land $ 1,921,500 x $ 2,600,000 Building 2 Land Improvements 1 671,000 457,500 x 2,600,000 = x 2,600,000 = Totals $ 3,050,000 0% Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Apportioned Cost Land Building 2 Building 3 Land Improvements Land Improvements 2 S 0 $ 0 S 0 S 0 $ 0
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 $2,600,000 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 $671,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $457,500 and is expected to last another 15 years with no salvage value. The land is valued at $1,921,500. 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 $ 340,400 191,400 2,262,000 178,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Answer is not complete. Percent of Allocation of Purchase Price Appraised Value Total Appraised Value Total cost of acquisition Land $ 1,921,500 x $ 2,600,000 Building 2 Land Improvements 1 671,000 457,500 x 2,600,000 = x 2,600,000 = Totals $ 3,050,000 0% Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Apportioned Cost Land Building 2 Building 3 Land Improvements Land Improvements 2 S 0 $ 0 S 0 S 0 $ 0
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