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In January 2011, Solaris Co. pays $2,750,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in...
In January 2011, Solaris Co. pays $2,750,000 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 a company office; it is appraised at $531,000, with a useful life of 20 years and an $70,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $619,500 that are expected to last another 12 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $1,799,500. Solaris also incurs the following additional costs: Cost to demolish Building 1$341,400Cost of additional land grading 191,400Cost to construct new building (Building 3), having a useful life of 25 years and a $398,000 salvage value 2,242,000Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 173,000
