(The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,750,000 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 $796,500, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $324,500 and is expected to last another 11 years with no salvage value. The land is valued at $1,829,000. The company also incurs the following additional costs. Cost to demolish Building 1 Cost of additional land grading Cost to construct Building 3, having a 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 $ 339,400 187,400 2,282,000 168,000

(The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,750,000 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 $796,500, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $324,500 and is expected to last another 11 years with no salvage value. The land is valued at $1,829,000. The company also incurs the following additional costs. Cost to demolish Building 1 Cost of additional land grading Cost to construct Building 3, having a 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 $ 339,400 187,400 2,282,000 168,000

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 55P

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Required information [The following information applies to the questions displayed below.) On January 1, Mitzu Co. pays a lump-sum amount of $2,600,000 for land, Bulding 1. Bullding 2 and Land Improvements 1. Bulding 1 has no value and will be demolished. Building 2 will be an office and is appralsed at $780,.000, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 Is valued at $420.000 and is expected to last another 14 years with no salvage value. The land is valued at $1,800,000. The company also incurs the following additional costs. $ 343,488 Cost to denolish Building 1 Cost of additional land grading Cost to construct Building 3, having a useful life of 25 years and a $482,000 salvage value Cost of new Land Improvenents 2 having a 20-year useful life and no salvage value 191,400 2,222,000 178,889 Required: 1. Allocate the costs Incurred by Mitzu to the appropriate columns and total each column. Percent of Total Allocation of purchase price Appraised…
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