Samtech Manufacturing purchased land and building for $5 million. In addition to

Question

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 $24,000 9,000 44,000 4,800 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $4.2 and $1.8 million, respectively. Shortly after acquisition, Samtech spent $90,000 to construct a parking lot and $48,000 for landscaping Required 1. Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter youn answers in whole dollars.) Assets Land Building Land improvements$ Initial Valuation $3,526,460 $ 1,511,340 138,000

Explanation / Answer

Cost of Land & Building Purchase price $5,000,000 Title Insurance 24000 Legal fees 9000 Sttae transfer fees 4800 Total cost $5,037,800 asset % of total value Amt allocated Land 4200000 70 $3,526,460 Building 1800000 30 $1,511,340 Total 6000000 ans 1 asset Land $3,526,460 Building $1,511,340 Land improvement 138000 ans 2 Cost of Land & Building Purchase price $5,000,000 Title Insurance 24000 Legal fees 9000 State transfer fees 4800 Demolition of Old building 330000 Sale of material -5000 Clearing & grading 87000 Total cost $5,449,800 asset % of total value Amt allocated 5449800 Land 4200000 70 $3,814,860 Building 1800000 30 $1,634,940 Total 6000000 asset Land $3,814,860 Building $1,634,940 Land improvement 138000 If any doubt please comemnt

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