Business, 14.06.2021 15:50 Zykuko

Semtech Manufacturing purchased land and building for $5 million. In addition to the purchase price, Semtech made the following expenditures in connection with the purchase of the land and building: Title insurance $ 24,000 Legal fees for drawing the contract 9,000 Pro-rated property taxes for the period after acquisition 44,000 State transfer fees 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.
1. Determine the initial valuation of each asset Semtech acquired in these transactions.
2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Semtech demolished the building. Demolition costs were $330,000 and the salvaged materials were sold for $5,000. In addition, Semtech spent $87,000 clearing and grading the land in preparation for the construction of a new building.

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