Question

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 spent $94,000 to construct a parking lot and $52,000 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 $370,000 and the salvaged materials were sold for $7,000. In addition, Samtech spent $91,000 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.) Initial Valuation Assets Land Building Land improvements Required 1 Required 2 > < Prev 1 of 6 ! Next >

Answer 1

	Computation Of Cost Of Land And Building
	Purchase Price			$       50,00,000
	Add:			$             28,000
	Title Insurance Cost
	Legal Fees			$                6,000
	State Transfer Fees			$                5,200
	Total Costs			$       50,39,200
	Note: Property tax shall not form the part of the acquisition.
	Allocation Of Land And Building
		Fair Value	Weight	Initial Valuation
	Land	3.6	0.6	$       30,23,520
	Building	2.4	0.4	$       20,15,680
		6		$       50,39,200
	Land Improvement
	Parking Lot		$           94,000
	Lanscaping		$           52,000
	Total		$       1,46,000
	Summary For Answer to Q1
	Land		3023520
	Building		2015680
	Land Improvement		$       1,46,000
	Computation Of Cost Of Land And Building
	Purchase Price			$       50,00,000
	Add:
	Title Insurance Cost			$             28,000
	Legal Fees			$                6,000
	State Transfer Fees			$                5,200
	Demolition of old building			$          3,70,000
	Land Clearing Expenses			$             91,000
	Less: Salvage Material			$              -7,000
	Total Cost Of Land			$       54,93,200
	Land Improvement
	Parking Lot		$           94,000
	Lanscaping		$           52,000
	Total		$       1,46,000
	Summary For Answer to Q2
	Land		$     54,93,200
	Building		0
	Land Improvement		$       1,46,000