Reference no: EM131533017

Assignment

Able Corporation purchased land as a factory site and contracted with Ready Construction to construct a factory. Able made the following expenditures related to the acquisition of the land, building, and machinery to equip the factory:

Purchase price of the land	1,400,000
Demolition and removal of old building	60,000
Clearing and grading the land before construction	145,000
Various closing costs in connection with acquiring the land	32,000
Architect's fee for the plans for the new building	70,000
Payments to LuLu for building construction	3,350,000
Machinery purchased	855,000
Freight charges on machinery	31,000
Trees, plants, and other landscaping	47,000
Installation of a sprinkler system for the landscaping	3,000
Cost to build special platforms and install wiring for the machinery	11,000
Cost of trial runs to ensure proper installation of the machinery	6,000
Fire and theft insurance on the factory for the first year of use	24,000

In addition to the above expenditures, Able purchased four forklifts from Fleet Street. In payment, Able paid $18,000 cash and signed an interest-bearing note requiring the payment of $50,000 at the end of one year. An interest rate of 8% properly reflects the time value of money for this type of loan.

Required:

Determine the acquisition costs of each of the assets Able acquired in the above transactions for land, building, machinery, land improvements, forklifts, and prepaid insurance. You must show the details of each category to receive credit.