Required information [The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,800,000 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 $610,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to last another 17 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 $398,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value $ 346,400 187,400 2,302,000 173,000 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 = Apportioned Cost Land Building 2 Land Improvements 1 Totals $ 0 0% Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Land = = II x = II $ 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 $2,800,000 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 $610,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to last another 17 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 $398,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value $ 346,400 187,400 2,302,000 173,000 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 = Apportioned Cost Land Building 2 Land Improvements 1 Totals $ 0 0% Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Land = = II x = II $ Building 2 Building 3 Land Improvements 1 Land Improvements 2 0 $ 0 $ 0 $ 0 $ 0 $ 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 $2,800,000 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 $610,000,
with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to
last another 17 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 $398,000 salvage value
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
$ 346,400
187,400
2,302,000
173,000
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
=
Apportioned Cost
Land
Building 2
Land Improvements 1
Totals
$
0
0%
Purchase Price
Demolition
Land grading
New building (Construction cost)
New improvements
Totals
Land
=
=
II
x
=
II
$
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%2F4b481b20-9a31-4489-aa1e-22e8cebd1fdc%2F639ac653-c80e-47a9-8ffb-cc6cb674a848%2Fgw7bz_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 $2,800,000 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 $610,000,
with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to
last another 17 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 $398,000 salvage value
Cost of new Land Improvements 2, having a 20-year useful life and no salvage value
$ 346,400
187,400
2,302,000
173,000
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
=
Apportioned Cost
Land
Building 2
Land Improvements 1
Totals
$
0
0%
Purchase Price
Demolition
Land grading
New building (Construction cost)
New improvements
Totals
Land
=
=
II
x
=
II
$
Building 2
Building 3
Land
Improvements 1
Land
Improvements 2
0
$
0
$
0
$
0
$
0
$
0
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