[The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,700,000 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 $810,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $330,000 and is expected to last another 11 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 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 $ 343,400 189,400 2,282,000 168,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. × Total cost of acquisition = Apportioned Cost Percent of Allocation of Purchase Price Appraised Value Total Appraised Value $ 1,860,000 × Land = Building 2 × = Land Improvements 1 × = Totals $ 1,860,000 0% 0

[The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,700,000 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 $810,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $330,000 and is expected to last another 11 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 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 $ 343,400 189,400 2,282,000 168,000 Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. × Total cost of acquisition = Apportioned Cost Percent of Allocation of Purchase Price Appraised Value Total Appraised Value $ 1,860,000 × Land = Building 2 × = Land Improvements 1 × = Totals $ 1,860,000 0% 0

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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