Teradene corporation purchased land as a factory site and

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Reference no: EM13574564

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 machinery to equip 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	$	1,200,000
Demolition and removal of old building		80,000
Clearing and grading the land before construction		150,000
Various closing costs in connection with acquiring the land		42,000
Architect's fee for the plans for the new building		50,000
Payments to Maxtor for building construction		3,250,000
Machinery purchased		860,000
Freight charges on machinery		32,000
Trees, plants, and other landscaping		45,000
Installation of a sprinkler system for the landscaping		5,000
Cost to build special platforms and install wiring for the machinery		12,000
Cost of trial runs to ensure proper installation of the machinery		7,000
Fire and theft insurance on the factory for the first year of use		24,000

In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $16,000 cash and signed a noninterest-bearing note requiring the payment of $70,000 in one year. An interest rate of 7% 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
Machinery
Land improvements
Fork lifts
Prepaid insurance

Reference no: EM13574564

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