Giant Green Company Pays $3,000,000 for a Tract of Land

Multiple Choice

Giant Green Company pays $3,000,000 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 $742,000,with a useful life of 25 years and a $75,000 salvage value.A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $400,500 that are expected to last another 18 years with no salvage value.Without the buildings and improvements,the tract of land is valued at $2,020,600.Giant Green also incurs the following additional costs:

-What is the amount that should be recorded for the tract of land?

A) $2,516,600
B) $2,020,600
C) $3,851,000
D) $1,916,400
E) $3,000,000