For the required 2, I don't know how to answer, the building should $0, right? because there is demolition cost which means the building does not exist anymore? how about the land valuation what's the number should be? Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the followingexpenditures in connection with the purchase of the land and building:Title insurance$26,0005,00046,0005,000Legal fees for drawing the contractPro-rated property taxes for the period after acquisitionState transfer feesAn independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million,respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping.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 $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearing andgrading the land in preparation for the construction of a new building.Complete this question by entering your answers in the tabs below.Required 1Required 2Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.)AssetsInitial ValuationLand2,583,040Building1,452,960Land improvements142,000%24%24%24 Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the follovexpenditures in connection with the purchase of the land and building:Title insurance$26,0005,00046,0005,000Legal fees for drawing the contractPro-rated property taxes for the period after acquisitionState transfer feesAn independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million,respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping.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 buildingDemolition costs were $350O,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearirgrading the land in preparation for the construction of a new building.Complete this question by entering your answers in the tabs below.Required 1Required 2Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building.Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.)AssetsInitial ValuationLand$3,769,000Building$%24

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: $26,000 5,000 Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees 46,000 5,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping. 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 $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearing and grading the land in preparation for the construction of a new building. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.) Assets Initial Valuation Land 2$ 2,583,040 Building 2$ 1,452,960 Land improvements $ 142,000

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11EA: The following intangible assets were purchased by Goldstein Corporation: A. A patent with a...

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For the required 2, I don't know how to answer, the building should $0, right? because there is demolition cost which means the building does not exist anymore? how about the land valuation what's the number should be?

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
$26,000
5,000
46,000
5,000
Legal fees for drawing the contract
Pro-rated property taxes for the period after acquisition
State transfer fees
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million,
respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping.
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 $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearing and
grading the land in preparation for the construction of a new building.
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.)
Assets
Initial Valuation
Land
2,583,040
Building
1,452,960
Land improvements
142,000
%24
%24
%24

Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the follov
expenditures in connection with the purchase of the land and building:
Title insurance
$26,000
5,000
46,000
5,000
Legal fees for drawing the contract
Pro-rated property taxes for the period after acquisition
State transfer fees
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million,
respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping.
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 $350O,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearir
grading the land in preparation for the construction of a new building.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building.
Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000
clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.)
Assets
Initial Valuation
Land
$
3,769,000
Building
$
%24

Expert Solution

Step 1

1. Calculation of Initial Valuation:

Total Purchase price = Land and Building Purchase Cost + Title Insurance + Legal fees + State transfer fees

Total Purchase Price = $4,000,000+$26,000+$5,000+$5,000 = $4,036,000

(The property taxes paid after acquisition would not be capitalized but expensed).

The purchase price of $4,036,000 would be allocated to land and building in the ratio of their fair values:

Asset	Fair Values (A)	Ratio (in %) (B)	Allocated cost (AxB)
Land	$3,200,000	64% (3,200,000/5,000,000)	$2,583,040
Building	$1,800,000	36% (1,800,000/5,000,000)	$1,452,960
	$5,000,000		$4,036,000

Initial value of land improvements = Parking Lot + Landscaping

Initial value of land improvements = $92,000+$50,000 = $142,000

Therefore initial valuation of each asset:

Land	$2,583,040
Building	$1,452,960
Land Improvements	$142,000

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