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a) Firstly, we need to match its depreciation to revenue still being earned from the theater, small stores, and apartment buildings, until the building gets razed. This demonstrates that Archer Company’s intentions when purchasing the land and buildings, was to raze the old building and construct a combined hotel and office building and earn their intended revenue. They cannot however, spread the cost of razing over the remaining life of the old buildings because that would imply that Archer Company’s intentions of purchase was to earn revenue from these buildings at the time of purchase, rather than demolishing and constructing the hotel and offices...
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