Teradene acquired in the above transactions

Assignment Help Accounting Basics

Reference no: EM131016559

Teradene Corporation purchased land as a factory site and contracted with Maxtor Construction to construct a factory. Teradene made the following expenditures related to the acquisition of the land, building, and equipment for the factory: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):


Purchase price of the land	$	1,330,000
Demolition and removal of old building		93,000
Clearing and grading the land before construction		215,000
Various closing costs in connection with acquiring the land		55,000
Architect's fee for the plans for the new building		63,000
Payments to Maxtor for building construction		3,380,000
Equipment purchased		925,000
Freight charges on equipment		45,000
Trees, plants, and other landscaping		58,000
Installation of a sprinkler system for the landscaping		6,300
Cost to build special platforms and install wiring for the equipment		25,000
Cost of trial runs to ensure proper installation of the equipment		8,300
Fire and theft insurance on the factory for the first year of use		37,000

In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $29,000 cash and signed a noninterest-bearing note requiring the payment of $83,000 in one year. An interest rate of 6% properly reflects the time value of money for this type of loan.

Required:

Determine the initial valuation of each of the assets Teradene acquired in the above transactions.

Assets	Initial valuation
Land
Building
Equipment
Land improvements
Fork lifts
Prepaid insurance

Reference no: EM131016559

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