Prepare single journal entry to record all the incurred cost

Reference no: EM131191761

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

Total cost of acquisition

Apportioned cost

Land

Building 2

Land improvements 1

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-

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 adjusting entry for the depreciation expense of Building 2.

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

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

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

Reference no: EM131191761

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