Allocate the costs incurred by mitzu to the appropriate

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On January 1, Mitzu Co. pays a lump-sum amount of $2,650,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished.

Building 2 will be an office and is appraised at $762,500, with a useful life of 20 years and a $80,000 salvage value. Land Improvements 1 is valued at $518,500 and is expected to last another 17 years with no salvage value. The land is valued at $1,769,000. The company also incurs the following additional costs.

Cost to demolish Building 1 $ 344,400

Cost of additional land grading 187,400

Cost to construct Building 3, having a useful life of 25 years and a $398,000 salvage value    2,222,000

Cost of new Land Improvements 2 having a 20-year useful life and no salvage value      168,000

Required:

Allocate the costs incurred by Mitzu to the appropriate columns and total each column.

Reference no: EM132380300

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