Business, 25.04.2020 01:07, Mathcat444

January 2010, Giant Green Company pays $3,000,000 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 in the company office: it is appraised at $742,000, with a useful life of 25 years and a $75,000 salvage value.

A lighted parking lot near Building 1 has improvements (Land improvement 1) valued at $400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,020,600 Giant Green also incurs the following additional costs:

Cost to demolish Building 1 $400,200

Cost of additional land grading 200,000

Cost to construct a new building (Building 3), having a useful life of 25 years and a $322,000 salvage value 3,851,000

Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 122,000

What is the amount that should be recorded for Building 2

A. $667,000

B. $703,800

C. $600,200

D. $742,000

E. $487,921

Answers: 1

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January 2010, Giant Green Company pays $3,000,000 for a tract of land with two buildings on it, it p...