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: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $16,000 5,000 36,000 4,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3 and $1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and $40,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Repeat requirement 1, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.
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: Title insurance Legal fees for drawing the contract Pro-rated property taxes for the period after acquisition State transfer fees $16,000 5,000 36,000 4,000 An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3 and $1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and $40,000 for landscaping. Required: 1. Determine the initial valuation of each asset Samtech acquired in these transactions. 2. Repeat requirement 1, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $86,000 clearing and grading the land in preparation for the construction of a new building.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 11EA: The following intangible assets were purchased by Goldstein Corporation: A. A patent with a...
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Transcribed Image Text: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:
Title insurance
Legal fees for drawing the contract
Pro-rated property taxes for the period
after acquisition
State transfer fees
$16,000
5,000
36,000
4,000
An independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.3 and
$1.1 million, respectively. Shortly after acquisition, Samtech spent $82,000 to construct a parking lot and $40,000
for landscaping.
Required:
1. Determine the initial valuation of each asset Samtech acquired in these transactions.
2. Repeat requirement 1, assuming that immediately after acquisition, Samtech demolished the building.
Demolition costs were $250,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent
$86,000 clearing and grading the land in preparation for the construction of a new building.
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