Accounting Help Required

FratBro23
Category:
Accounting
Price: $75 USD

Question description

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$346,400  

  Cost of additional land grading 189,400  

  Cost to construct new building (Building 3), having a useful life

    of 25 years and a $402,000 salvage value 2,222,000  

  Cost of new land improvements (Land Improvements 2) near Building 2     having a 20-year useful life and no salvage value 173,000  

  Total costs 7,965,799  

   

Allocation   of purchase price

   

Appraised   value

   

Percent   of total appraized value

   

X

   

Total   cost of acquisition

   

=

   

Apportioned   cost

   

Land

   

   

   

x

   

   

=

   

   

Building   2

   

   

   

x

   

   

=

   

   

Land   improvements 1

   

   

   

x

   

   

=

   

   

Total

   

   

   

   

   

   

   

   

Land

   

Building   2

   

Building   3

   

Land   Improvements 1

   

Land   Improvements 2

   

Purchase   Price

   

   

   

   

   

   

Demolition

   

   

   

   

   

   

Land   grading

   

   

   

   

   

   

New   Building (Construction cost)

   

   

   

   

   

   

New   Improvements cost

   

   

   

   

   

   

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 

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.

Record the year-end adjusting entry for the depreciation expense of Building 2

Record the year-end adjusting entry for the depreciation expense of Building 3

Record the year-end adjusting entry for the depreciation expense of Land Improvements 1

Record the year-end adjusting entry for the depreciation expense of Land Improvements 2.


Tutor Answer

(Top Tutor) Daniel C.
(997)
School: University of Virginia
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