Business, 17.06.2020 19:57 22chandlerlashley

In January 2018, Mitzu Co. pays $2,600,000 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 $644,000, with a useful life of 20 years and a $60,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $420,000 that are expected to last another 12 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,736,000. The company also incurs the following additional costs: Cost to demolish Building 1 $328,400
Cost of additional land grading 175,400
Cost to construct new building (Building 3), having a useful life of 25 years and a $392,000 salvage value 2,202,000
Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 164,000
Total costs $5,469,800

Required:
a. Allocate the costs incurred by Mitzu to the appropriate columns and total each column.
b. Prepare a single journal entry to record all the incurred costs assuming they are paid in cash on January 1, 2013.
c. 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.

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In January 2018, Mitzu Co. pays $2,600,000 for a tract of land with two buildings on it. It plans to...

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