FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…
Question
! Required information [The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $793,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $366,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,891,000. The company also incurs the following additional costs. Cost to demolish Building 1 Cost of additional land grading $ 347,400 193,400 2,262,000 168,000 Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Total cost of Allocation of Purchase Price Appraised Value Percent of Total Appraised Value Apportioned Cost acquisition Land Building 2 Land Improvements 1 Totals Land Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Building 2 x Building 3 11 11 = = Land Improvements 1 Land Improvements 2
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Transcribed Image Text:! Required information [The following information applies to the questions displayed below.] On January 1, Mitzu Company pays a lump-sum amount of $2,600,000 for land, Building 1, Building 2, and Land Improvements 1. Building 1 has no value and will be demolished. Building 2 will be an office and is appraised at $793,000, with a useful life of 20 years and a $75,000 salvage value. Land Improvements 1 is valued at $366,000 and is expected to last another 12 years with no salvage value. The land is valued at $1,891,000. The company also incurs the following additional costs. Cost to demolish Building 1 Cost of additional land grading $ 347,400 193,400 2,262,000 168,000 Cost to construct Building 3, having a useful life of 25 years and a $400,000 salvage value Cost of new Land Improvements 2, having a 20-year useful life and no salvage value Required: 1. Allocate the costs incurred by Mitzu to the appropriate columns and total each column. Total cost of Allocation of Purchase Price Appraised Value Percent of Total Appraised Value Apportioned Cost acquisition Land Building 2 Land Improvements 1 Totals Land Purchase Price Demolition Land grading New building (Construction cost) New improvements Totals Building 2 x Building 3 11 11 = = Land Improvements 1 Land Improvements 2
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