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Item 6

Item 6 Part 3 of 3 1.42 points

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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 $660,000, with a useful life of 20 years and a $90,000 salvage value. Land Improvements 1 is valued at $420,000 and is expected to last another 14 years with no salvage value. The land is valued at $1,920,000. The company also incurs the following additional costs.

Cost to demolish Building 1	$	345,400
Cost of additional land grading		189,400
Cost to construct Building 3, having a useful life of 25 years and a $402,000 salvage value		2,202,000
Cost of new Land Improvements 2 having a 20-year useful life and no salvage value		178,000

3. Using the straight-line method, prepare the December 31 adjusting entries to record depreciation for the first year these assets were in use. View transaction list Journal entry worksheet 2 3 4 Record the year-end adjusting entry for the depreciation expense of Building Note: Enter debits before credits. Date General Journal Debit Credit Dec 31 Record entry Clear entry View general journal

Answer 1

Carculation of Depreciation Building - part of Building a t 7 No Depreciation - No lost Cost incurred for demolish is not Cost, it is loss. 7 Cost - 660000 Saivoje Value - 90000 Valve to be depreciared . $ 40000 No. of years - 20 years Year deprevation - 540,000 / 20 - 9000) - Building 3 = lost - 9.202.000 40-2000 Sauvage Value Je Volue 1800000 Vave to be depreciared 25 years No. of years yearly depreiation = = 18,00,000/25 72000/- provement -1 H20000 Adelinas cocer Cost Additional cost 189 400 609H00 to Yearly Depreiarion = 609400/14 - 43528/- Shot on realme 1 By @m!

Vand Improvement 2 7 Cost 178000 20 years life Salvage - 178000 (20 Yearly Depreciatim 89001 Note 0 7 07 Land - NO deprevahon applicable. Only applicable o improvements Cost of Demolish is not incurred on Purchase or improvement, so no depreciation is applicable on it. Date credir 31 dec. Journal Entry Debit Particular Depreciation on Guilding 2 24000 De preuatim on Building 3 92000 Depreciahon an Land Impro 1 43528 Depreciation m Land Improvement 2 8900 To Building 2 To Building 3 To Vand Improvement i To fand Improvement 2 24000 72000 43528 8900 Shot on realme By am!