Question

Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building. Demolition costs were $260,000 and the salvaged materials were sold for $6,500. In addition, Samtech spent $80,000 clearing and grading the land in preparation for the construction of a new building

Answer 1

purchase cost + 338500

Explanation:

given that immediately after acquisition, Samtech demolished the building. Demolition costs were $260,000 and the salvaged materials were sold for $6,500.

In addition, Samtech spent $80,000 clearing and grading the land in preparation for the construction of a new building.

Thus initial valuation of the asset = purchase cost + expenses - sale value of salvaged materials

Hence here we get

initial value = purchase cost + 260000-6500+80000

= purchase cost + 338500