Answer:
Semtech Manufacturing
1. Initial valuation of each asset:
Land = $3,526,460
Building = $1,511,340
2. The initial valuation of land = $5,449,800
Explanation:
a) Data and Calculations:
Cost of purchased land and building = $5 million
Additional expenditures:
Title insurance $ 24,000
Legal fees for drawing the contract 9,000
Prorated property taxes for the period after acquisition 44,000
State transfer fees 4,800
Allowed additional costs:
Title insurance $ 24,000
Legal fees for
drawing the contract 9,000
State transfer fees 4,800
Total additional costs $37,800
Total expenditure on the land and building = $5.037.8 million
Initial valuation of each asset:
Land = $3,526,460 ($5,037,800 * $4,200,000/$6,000,000)
Building = $1,511,340 ($5,037,800 * $1,800,000/$6,000,000)
Cost of land after the demolition of the building:
Initial purchase cost of land and building = $5 million
Additional cost = $37,800
Demolition costs = $330,000
Salvage of materials ($5,000)
Clearing and grading land = $87,000
Total cost of land = $5,449,800
