Question

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 $644,000, with a useful life of 20 years and a $60,000 salvage value. land improvements 1 is valued at $420,000 and is expected to last another 12 years with no salvage value. the land is valued at $1,736,000. 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 $392,000 lvage value cost of new land improvements 2, having a 20-year useful life and salvage value $ 328,400 175,400 2,202,000 164,000 equired: allocate the costs incurred by mitzu to the appropriate columns and total each column.allocation of purchase price land building 2 land improvements 1 totals total appraised value saved total cost of acquisition apportioned cost hel purchase price demolition land grading new building (construction cost) new improvements totals appraised value 1.736.000 644.000 420.000 § 2.800.000 land § 2,600,000 328.400 175,400 164 000 § 164,000 3.431.800 0% building 2 building 3 land improvements 1. land improvements

Answer 1

The costs incurred by Mitzu are allocated to different categories such as land, buildings, and land improvements.

Step-by-step explanation:

Allocation of purchase price:

Land: $1,736,000

Building 2: $644,000

Land Improvements 1: $420,000

Total appraised value: $2,800,000

Total cost of acquisition:

Apportioned cost to new land: $2,600,000

Demolition: $328,400

Land grading: $175,400

New building (construction cost): $164,000

New improvements: $164,000

Total: $3,431,800

Percent allocation:

Land: 50.66%

Building 2: 18.76%

Building 3: 0%

Land Improvements 1: 12.24%

Land Improvements 2: 13.38%