In January 2013, 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 $823,500, with a useful life of 20 years and an $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $305,000 that are expected to last another 10 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,921,500. The company also incurs the following additional costs: Cost to demolish Building 1 Cost of additional land grading Cost to construct new building (Building 3), having a useful life of 25 years and a $402,000 salvage value Cost of new land improvements (Land Improvements 2) near Building 2 a 20-year useful life and no salvage value Total costs Allocation of purchase price Appraised valu e Percent o f total appraized value $ 346,400 189,400 2,222,000 having 173,000 7,965,799 X Total cos t of acquisition = Apportioned cos t Land x = Building 2 x = Land improvement s1 x = Total Land Purchase Price Demolition Land grading New Building (Construction cost) New Improvem ents cost Buildin g 2 Building 3 Land Improveme nts 1 Land Improveme nts 2 Totals 2. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013. Journal Entry Worksheet A. Record the costs of the plant assets. Journal Entry Worksheet Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use. A. Record the year-end B. Record the year-end C. Record the year-end Improvements 1 D. Record the year-end Improvements 2. adjusting entry for the depreciation expense of Building 2 adjusting entry for the depreciation expense of Building 3 adjusting entry for the depreciation expense of Land adjusting entry for the depreciation expense of Land
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