Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building:
Title insurance $ 25,000 Legal fees for drawing the contract 9,500 Pro-rated property taxes for the period after acquisition 45,000 State transfer fees 4,900
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $2 million, respectively. Shortly after acquisition, Samtech spent $91,000 to construct a parking lot and $49,000 for landscaping.
Required:
1. Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.)
Assets Initial Valuation Land $2,423,640 Building $1,615,760 Land improvements
2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $340,000 and the salvaged materials were sold for $5,500. In addition, Samtech spent $88,000 clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.)
Assets Initial Valuation Land $4,461,900 Building $0 Land improvements
| Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: |
| Title insurance | $ | 25,000 | |
| Legal fees for drawing the contract | 9,500 | ||
| Pro-rated property taxes for the period after acquisition | 45,000 | ||
| State transfer fees | 4,900 | ||
| An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $2 million, respectively. Shortly after acquisition, Samtech spent $91,000 to construct a parking lot and $49,000 for landscaping. |
| Required: |
| 1. | Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.)
|
Related questions
Samtech Manufacturing purchased land and building for $5million. In addition to the purchase price, Samtech made thefollowing expenditures in connection with the purchase of the landand building: Title insurance $ 24,000 Legal fees for drawing thecontract 9,000 Pro-rated property taxes for the period afteracquisition 44,000 State transfer fees 4,800 An independentappraisal estimated the fair values of the land and building, ifpurchased separately, at $4.2 and $1.8 million, respectively.Shortly after acquisition, Samtech spent $90,000 to construct aparking lot and $48,000 for landscaping. Required:
1. Determine the initial valuation of each asset Samtechacquired in these transactions. (Enter your answers in wholedollars.)
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2. Determine the initial valuation of each asset, assuming thatimmediately after acquisition, Samtech demolished the building.Demolition costs were $330,000 and the salvaged materials were soldfor $5,000. In addition, Samtech spent $87,000 clearing and gradingthe land in preparation for the construction of a new building.(Enter your answers in whole dollars.)
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