Need help putting together the table my numbers arent adding up right...... In J
ID: 2355860 • Letter: N
Question
Need help putting together the table my numbers arent adding up right......
In January 2011, Keona Co. pays $2,800,000 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 $641,300 with a useful life of 20 years and an $80,000 salvage value. A lighted parking lot near Building 1 has improvements ( Land Improvements 1) valued at $408,100 that are expected to last another 14 years with no salvage value. Without the building and improvements, the tract of land is valued at $1,865,600. The company also incures the following additional costs:
cost to demolish Building 1............................................ $422,600
cost of additional land grading....................................$167,200
cost to construct new building (building 3), having a useful life of 25 years and a $390,100 salvage value..................................................$2,019,000
cost of new land improvements (Land Improvements 2) near building 2 having a 20 year useful life and no salvage value....................................$158,000
1. Prepare a table with the following column headings: Land, Building 2, Building 3, Land Improvements 1, Land Improvements 2. Allocate the cost incurred by Keona ot the appropriate columns and total each column ( round percents to the nearest 1%)
Explanation / Answer
sol: Appraised value of Assets Land $1,865,600 Building $641,300 Land Improvements $408,100 Total appraised value = $2,915,000 at time of purchase Cost Allocated to each asset at time of purchase Land (1,865,600 / 2,915,000) x 2,800,000 = $1,792,000 Building (2) (641,300 / 2,915,000) x 2,800,000 = $616,000 Land Improvements (1) (408,100 / 2,915,000) x 2,800,000 = $392,000 Cost to demolish Building 1 $ 422,600 Add to Land Cost of additional land grading 167,200 Add to Land Cost to construct new building (Building 3), having a useful life of 25 years and a $390,100 salvage value 2,019,000 Add $2,019,000 to Building (3) Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 158,000 Add to Land Improvements (2)