Question

Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: points Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $30,000 7,000 50,000 5,400 eBook An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $1 million, respectively. Shortly after acquisition, Samtech spent $96,000 to construct a parking lot and $54,000 for landscaping. Hint Print Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $390,000 and the salvaged materials were sold for $8,000. In addition, Samtech spent $93,000 clearing and grading the land in preparation for the construction of a new building. References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.) Initial Valuation Assets Land Building Land improvements Required 1 Required 2 >

Answer 1

1) initial valuation
land			2281800
building			760600
land improvements (96000+54000)			150000
Total cost of land & building
purchase cost -land & building			3000000
title insurance			30000
legal fees			7000
state tranfer fees			5400
Total cost			3042400
		appraised value	%of total appraised value	allocation
Land		3000000	75%	2281800
Building		1000000	25%	760600
		4000000	100%	3042400
2)		land
initial cost		3042400
cost of demolishing		390000
salvage material sold		-8000
clearing & garding		93000
total		3517400
Land		3517400
land improvement		150000