Answer:
1.
Land $3,034,200
Building $1,011,400
Land improvement $154,000
2.
Land $4,541,600
Land improvement $154,000
Explanation:
Under GAAP, the valuation of assets will be included all the cost which are necessary to put the asset in ready-to-use stage.
1.
* Cost of land and building = Purchased price + Title insurance + Legal fees for drawing the contract + State transfer fees = 4,000,000 + 32,000 + 8,000 + 5,600 = $4,045,600
Cost of land and building will be allocated based on their fair values
=> Land : 4,045,600 * 3.6/(3.6+1.2) = $3,034,200; Building = 4,045,600 * 1.2/(3.6+1.2) = $1,011,400
* Land improvement - Cost for parking lot + Cost for landscaping = 98,000 + 56,000 = $154,000.
2.
* Land improvement - Cost for parking lot + Cost for landscaping = 98,000 + 56,000 = $154,000.
* Cost of land = Purchased price + Title insurance + Legal fees for drawing the contract + State transfer fees + Demolition cost - salvaged materials + Clearing and grading cost = 4,000,000 + 32,000 + 8,000 + 5,600 + 410,000 - 9,000 + 95,000 = $4,541,600.
