In january 2013, mitzu co. pays $2,600,000 for a tract of land with two buildings on it. it plans to demolish building 1 and build a new store in its place.
building 2 will be a company office; it is appraised at $644,000, with a useful life of 20 years and a $60,000 salvage value. a lighted parking lot near building 1 has improvements (land improvements 1) valued at $420,000 that are expected to last another 12 years with no salvage value. without the buildings and improvements, the tract of land is valued at $1,736,000. the company also incurs the following additional costs: cost to demolish building 1 $ 328,400cost of additional land grading 175,400cost to construct new building (building 3), having a useful life of 25 years and a $392,000 salvage value 2,202,000cost of new land improvements (land improvements 2) near building 2 having a 20-year useful life and no salvage value 164,000total costs $5,469,800 1. allocate the costs incurred by mitzu to the appropriate columns and total each column.2. prepare a single journal entry to record all the incurred costs assuming they are paid in cash on january 1, 2013.3. using the straight-line method, prepare the december 31 adjusting entries to record depreciation for the 12 months of 2013 when these assets were in use.