On January 1, 2017, ML Company acquired a parcel of real estate that included land and a building for a negotiated price of $2,290,000. Before purchasing the property, ML paid $30,000 for an appraisal that estimated the fair value of the land to be $756,000 and the building to be $1,944,000. In addition, LM incurred closing costs of $180,000 to complete the transfer of the property and the purchase was financed through a 20 year mortgage note payable with an interest rate of 4%.. Two days after completion of the transfer ML had a water leak in the building that caused $75,000 worth of damage to the building which was repaired. Required: Assuming ML occupies the building, determine the acquisition cost that would be capitalized to the land and building accounts. Please show all work. Thank you
On January 1, 2017, ML Company acquired a parcel of real estate that included land and a building for a
negotiated price of $2,290,000. Before purchasing the property, ML paid $30,000 for an appraisal that estimated the fair value of the land to be $756,000 and the building to be $1,944,000. In addition, LM incurred closing costs of $180,000 to complete the transfer of the property and the purchase was financed through a 20 year mortgage note payable with an interest rate of 4%.. Two days after completion of the transfer ML had a water leak in the building that caused $75,000 worth of damage to the building which was repaired.
Required: Assuming ML occupies the building, determine the acquisition cost that would be capitalized to the land and building accounts.
Please show all work. Thank you
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