Question

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 EV of $1. PV of $1. EVA of S. PVA of $1. FVAD of 51 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Purchase price of the land Demolition and removal of old building Clearing and grading the land before construction Various closing costs in connection with acquiring the land Architect's fee for the plans for the new building Payments to Maxtor for building construction Equipment purchased Freight charges on equipment Trees, plants, and other landscaping Installation of a sprinkler system for the landscaping Cost to build special platforms and install wiring for the equipment Cost of trial runs to ensure proper installation of the equipment Fire and theft insurance on the factory for the first year of use $1,389.499 98,090 249.889 69,000 68,089 3,430,000 950,000 50,000 63,000 5,800 30,890 8.800 42,000 on Proper Insta In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar In payment, Teradene paid $34,000 cash and signed a noninterest-bearing note requiring the payment of $88,000 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, (Round your answers to the nearest whole dollars.) Assets Initial valuation Building

Answer 1

Initial valuation of assets
cost of land
purchase price of land					1380000
demolition & removal of old building					98000
clearing & gradning land before construction					240000
closing cost in connection					60000
Total cost of land					1778000
cost of building
architect's fees for plans for new building					68000
payment to maxtor for building construction					3430000
total cost of building					3498000
cost of equipment
purchase price of equipment					950000
freight charges on equipment					50000
cost of building special platform					30000
cost of trail runs to ensure proper installation					8800
total cost of equipment					1038800
cost of improvement
trees plant landscaping					63000
installation of sprinkler system					6800
total cost of improvement					69800
cost of forklift
purchase of forklift					34000
non interest bearing note (88000*0.9346)					82243
total cost of forklift					116243
prepaid insurance
Fire & theft insurance on the factory					42000