Samtech Manufacturing purchased land and building for $4 million. In addition to

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:

An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.6 and $1.2 million, respectively. Shortly after acquisition, Samtech spent $98,000 to construct a parking lot and $56,000 for landscaping.

Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.)

      

Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $410,000 and the salvaged materials were sold for $9,000. In addition, Samtech spent $95,000 clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.)

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:

Explanation / Answer

1. Cost of acquisition = $4 millions

Add: Title insurance = $32000

Add: Property taxes $52000

Add: Legal fees $8000

State transfer fees $ 5600

Total cost of acquisition $ 4097600

The ratio of land and building is 3:1

2.

Particulars Land Building Cost of acquisition in 3:1 $3073200 $1024400 Construction of Parking lot $98000 Cost of landscaping $56000 initial valuation of each asset $3129200 $1122400

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