In january 2013 mitzu co pays 2700000 for a tract of land

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In January 2013, Mitzu Co. pays $2,700,000 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 $767,000, with a useful life of 20 years and an $80,000 salvage value. A lighted parking lot near Building 1 has improvements valued at $413,000 that are expected to last another 14 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,770,000. The company also incurs the following additional costs:




Cost to demolish Building 1 $ 347,400  
Cost of additional land grading
191,400  

Cost to construct new building (Building 3), having a useful lifof 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
178,000  

Reference no: EM13592614

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