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In January 2015, Mitzu Co. pays $2,650,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $600,000, with a useful life of 20 years and a $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $510,000 that are expected to last another 17 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,890,000. The company also incurs the following additional costs:

 

 

 

 

  Cost to demolish Building 1

$

338,400

  Cost of additional land grading

 

191,400

  Cost to construct new building (Building 3), having a useful life
    of 25 years and a $402,000 salvage value

 

2,262,000

  Cost of new land improvements (Land Improvements 2) near Building 2     having a 20-year useful life and no salvage value

 

168,000

     

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M91613385

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