Assignment Task: Last week, you closed the deal and purchased land and a building for $6 million. Other expenses incurred in connection to this purchase included:
Attorney fees for the contract $10,000
Commissions 55,000
Title insurance 8,500
Pro-rated Property taxes 75,000
An independent appraisal was requested to determine the individual fair value estimates. The land appraised at $5.5 million and the building at $1.9 million.
Spending on the property started right away. Janson installed fences and completed the driveway at a cost of $45,000 and $75,000, respectively.
Q1. What is the initial valuation of each asset Janson purchased in these transactions?
Q2. Suppose Janson, immediately after acquiring the property, decided to tear down the building. The cost of the removal of the building was $350,000 and salvaged materials sold for $8,000. An additional $100,000 was paid to grade the land for building the new fitness center. What is the initial valuation of each asset Janson acquired in this transaction?
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