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 $1, PVA of $1, FVAD of $1 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 $1,380,eee 98,008 240,000 60,000 68,e00 3,430,000 950,ese 58,80৪ 63,000 6,800 30,080 8,800 42,000 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.) Initial valuation Assets Land Building Equipment

Answer 1

Land Purchase price of the land $1,380,000.00 Demolition and removal of old building 98,000.00 $ 240,000.00 Clearing and grading the land before construction Various closing costs in connection with acquiring the land 60,000.00 $1,778,000.00 Total Building Architect's fee for the plans for the new building Payments to Maxtor for building construction 68,000.00 $3,430,000.00 $3,498,000.00 Total Equipment Equipment ased 950,000.00 Freight charges on equipment 50,000.00 Cost to build special platforms and install wiring for the equipment s 30,000.00 Cost of trial runs to ensure proper installation of the equipment 8,800.00 $1,038,800.00 Total Trees Plant and other landscaping Trees Plant and other landscaping Installation of a sprinkler system for the landscaping 63,000.00 6,800.00 Total 69,800.00 42,000.00 Insurance Forklifts Cash Interest PV ($88000 0.9346) $ 34,000.00 82,244.80 $ 116,244.80 Total