Samtech Manufacturing puchased land building for $4 million. In addition to the

Question

Samtech Manufacturing puchased land building for $4 million. In addition to the purchase price, Samtech made made the following expenditures in connection with the purchase of the land and building: Title insurance $22000 legal fees for drawing the contract $8000 pro-rated taxes for the period after acquisition $42000 state transfer fees $4600. An independent appraisal estimated the fair values of the land and buiding if purchased separately at $1 and $4 million respectively. Shortly after acquisition, Samtech spent $88000 to construct a parking lot and $46000 for landscaping.

What is the inital valuation of the land and building?

Explanation / Answer

Initial valuation of land and building would be in $ million Purchase price 4 Expenditure in connectionwith purchase - Title Insurance 0.022 - Legal fees for drawing the contract 0.008 - State transfer fees 0.0046 Value of land & building 4.0346

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