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:

Question

Question

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	$	20,000
Legal fees for drawing the contract		7,000
Pro-rated property taxes for the period after acquisition		40,000
State transfer fees		4,400

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 $86,000 to construct a parking lot and $44,000 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 $290,000 and the salvaged materials were sold for $8,000. In addition, Samtech spent $83,000 clearing and grading the land in preparation for the construction of a new building.

Intermediate-Accounting-I

Add a comment Improve this question Transcribed image text

Answer 1

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:

Homework Answers

Request Answer!

Add Answer to:
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:

Post as a guest

Earn Coins

Samtech Manufacturing purchased land and building for $3 million. In addition to the purchase price, Samtech...