For the required 2, I don't know how to answer, the building should $0, right? because there is demolition cost which means the building does not exist anymore? how about the land valuation what's the number should be? Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the followingexpenditures in connection with the purchase of the land and building:Title insurance$26,0005,00046,0005,000Legal fees for drawing the contractPro-rated property taxes for the period after acquisitionState transfer feesAn independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million,respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping.Required:1. Determine the initial valuation of each asset Samtech acquired in these transactions.2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building.Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearing andgrading the land in preparation for the construction of a new building.Complete this question by entering your answers in the tabs below.Required 1Required 2Determine the initial valuation of each asset Samtech acquired in these transactions. (Enter your answers in whole dollars.)AssetsInitial ValuationLand2,583,040Building1,452,960Land improvements142,000%24%24%24 Samtech Manufacturing purchased land and building for $4 million. In addition to the purchase price, Samtech made the follovexpenditures in connection with the purchase of the land and building:Title insurance$26,0005,00046,0005,000Legal fees for drawing the contractPro-rated property taxes for the period after acquisitionState transfer feesAn independent appraisal estimated the fair values of the land and building, if purchased separately, at $3.2 and $1.8 million,respectively. Shortly after acquisition, Samtech spent $92,000 to construct a parking lot and $50,000 for landscaping.Required:1. Determine the initial valuation of each asset Samtech acquired in these transactions.2. Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the buildingDemolition costs were $350O,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000 clearirgrading the land in preparation for the construction of a new building.Complete this question by entering your answers in the tabs below.Required 1Required 2Determine the initial valuation of each asset, assuming that immediately after acquisition, Samtech demolished the building.Demolition costs were $350,000 and the salvaged materials were sold for $6,000. In addition, Samtech spent $89,000clearing and grading the land in preparation for the construction of a new building. (Enter your answers in whole dollars.)AssetsInitial ValuationLand$3,769,000Building$%24

Question

Accepted Answer

1. Calculation of Initial Valuation:
Total Purchase price = Land and Building Purchase Cost + Title…

Asset	Fair Values (A)	Ratio (in %) (B)	Allocated cost (AxB)
Land	$3,200,000	64% (3,200,000/5,000,000)	$2,583,040
Building	$1,800,000	36% (1,800,000/5,000,000)	$1,452,960
	$5,000,000		$4,036,000

Land	$2,583,040
Building	$1,452,960
Land Improvements	$142,000