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 $ 25,000 Legal fees for drawing t

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.
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.


0 0
Add a comment Improve this question Transcribed image text
Answer #1

Req 1)

step 2)

% of total fair 

value (step 3)

Inital value
3,000,0000.6 or 60%2,423,640land
2,000,0000.4 or 40%
1,615,760building
5,000,0001 or 100%4,039,400total

step 1) 4,000,000+25,000+9,500+4,900= 4,039,400

step 3) 5,000,000/3,000,000= 0.6

5,000,000/2,000,000= 0.4


step 4) 0.6*4,039,400= 2,423,640

0.4* 4,039,400= 1,615,760

step 5) land improvement 91,000+49,000= 140,000


answer: 

assetsinitial valuation
land2,423,640
building1,615,760
land improvements140,000


Req 2) 

step 1) 340,000- 5,500= 334,500

step 2) 4,000,000+25,000+9,500+4,900+334,500+88,000= 4,461,900 total cost of land

step 3) 91,000+49,000= 140,000 land improvements

step 4) building= 0


Answer:

assetsinitial valuation
land4,461,900
building0
land improvements140,000


answered by: anonymous
Add a comment
Know the 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: Title insurance $ 25,000 Legal fees for drawing t
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 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:

    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$20,000Legal fees for drawing the contract7,000Pro-rated property taxes for the period after acquisition40,000State transfer fees4,400 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...

  • Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...

    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 Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $26,000 5,000 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...

  • Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...

    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 $ 21,000 Legal fees for drawing the contract 7,500 Pro-rated property taxes for the period after acquisition 41,000 State transfer fees 4,500 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.9 and $1.1 million, respectively. Shortly after acquisition, Samtech spent...

  • Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...

    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 $ 34,000 Legal fees for drawing the contract 9,000 Pro-rated property taxes for the period after acquisition 54,000 State transfer fees 5,800 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.5 and $1.5 million, respectively. Shortly after acquisition, Samtech spent...

  • Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...

    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 Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $ 19,000 6,500 39,000 4,300 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.7 and $1.3 million, respectively. Shortly after acquisition, Samtech spent...

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

    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: Title insurance $ 23,000 Legal fees for drawing the contract 8,500 Pro-rated property taxes for the period after acquisition 43,000 State transfer fees 4,700 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...

  • Check my work Samtech Manufacturing purchased land and building for $5 million. In addition to the...

    Check my work Samtech Manufacturing purchased land and building for $5 million. In addition to the purchase price, Samtech made the following expenditures in connection with the purchase of the land and building: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $28,000 6,000 48,000 5,200 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.6 and $2.4 million, respectively. Shortly after acquisition,...

  • Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech...

    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 $ 31,000 Legal fees for drawing the contract 7,500 Pro-rated property taxes for the period after acquisition 51,000 State transfer fees 5,500 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.5 and $1.5 million, respectively. Shortly after acquisition, Samtech spent...

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

    1 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: 1 Title insurance $30,000 7,000 50,000 5,400 points Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees еВook An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3 and $1 million, respectively. Shortly after...

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

    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...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT