Question

On March 31, 2020, Capital Investment Advisers paid $4,580,000 for land with two buildings on it. The plan was to demolish Building 1 and build a new store (Building 3) in its place. Building 2 was to be used as a company office and was appraised at a value of $1,075,020. A lighted parking lot near Building 2 had improvements (Land Improvements 1) valued at $607,620. Without considering the buildings or improvements, the tract of land was estimated to have a value of $2,991,360. Capital incurred the following additional costs: Cost to demolish Building 1 Cost of additional landscaping Cost to construct new building (Building 3) Cost of new land improvements near Building 2 (Land Improvements 2) $ 706,160 272,520 3,240,400 254,800 Required: 1. Allocate the costs incurred by Capital to the appropriate columns and total each column. Building 2 Building 3 Land 4,580,000 Land Land Improvements 1 Improvements 2 $ Purchase price Demolition Landscaping New building New improvements Totals $ 4,580,000 $ 0 $ 0 $ 0 $

Answer 1

Pageno Answers 1) The cost incurred by Capital to appropriate columns Allocation of Appoised Percers of Total Total cost of Apportioned Proichalepil Value APP Appraised value acquistion cost 0.64 Ku 580000 9991,360 land 2991360 by 4674000 >2931200 580,000 0.23X US80000 1045020 Building a 1075,0204649.000 =023 4580.000 1053400 land 013X4580000 9580,000 = 59 5400 2400 -0-13 Improvement 607,620 604,690 4646000 Total 14674000 1 4580000 land Building Building and I'm hand I prove ments in "Improvement Purchase powie 2931200 1053400 5.95000 Demolition 706,160 handscaping 242 520 New Building 3240,400 New Impro 254800 vements Total 39098801053400 3240400 595400 a $4800

Pageno 2) March 31, 2020, to record all the incurred Costę, Debit Date | General Journal 31-Mouch land 3909880 Building a 1053400 Building 3 3240uod Land Improvel ments i 595400 Land Improve asu8oo ments a To cash 9063880