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 $ 1,310,000 Demolition and removal of old building 91,000 Clearing and grading the land before construction 205,000 Various closing costs in connection with acquiring the land 53,000 Architect's fee for the plans for the new building 61,000 Payments to Maxtor for building construction 3,360,000 Equipment purchased 915,000 Freight charges on equipment 43,000 Trees, plants, and other landscaping 56,000 Installation of a sprinkler system for the landscaping 6,100 Cost to build special platforms and install wiring for the equipment 23,000 Cost of trial runs to ensure proper installation of the equipment 8,100 Fire and theft insurance on the factory for the first year of use 35,000 In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $27,000 cash and signed a noninterest-bearing note requiring the payment of $81,000 in one year. An interest rate of 8% 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.)
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 $ 1,310,000 Demolition and removal of old building 91,000 Clearing and grading the land before construction 205,000 Various closing costs in connection with acquiring the land 53,000 Architect's fee for the plans for the new building 61,000 Payments to Maxtor for building construction 3,360,000 Equipment purchased 915,000 Freight charges on equipment 43,000 Trees, plants, and other landscaping 56,000 Installation of a sprinkler system for the landscaping 6,100 Cost to build special platforms and install wiring for the equipment 23,000 Cost of trial runs to ensure proper installation of the equipment 8,100 Fire and theft insurance on the factory for the first year of use 35,000 In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $27,000 cash and signed a noninterest-bearing note requiring the payment of $81,000 in one year. An interest rate of 8% 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.)
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 42P
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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 | $ | 1,310,000 | |
| Demolition and removal of old building | 91,000 | ||
| Clearing and grading the land before construction | 205,000 | ||
| Various closing costs in connection with acquiring the land | 53,000 | ||
| Architect's fee for the plans for the new building | 61,000 | ||
| Payments to Maxtor for building construction | 3,360,000 | ||
| Equipment purchased | 915,000 | ||
| Freight charges on equipment | 43,000 | ||
| Trees, plants, and other landscaping | 56,000 | ||
| Installation of a sprinkler system for the landscaping | 6,100 | ||
| Cost to build special platforms and install wiring for the equipment | 23,000 | ||
| Cost of trial runs to ensure proper installation of the equipment | 8,100 | ||
| Fire and theft insurance on the factory for the first year of use | 35,000 | ||
In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $27,000 cash and signed a noninterest-bearing note requiring the payment of $81,000 in one year. An interest rate of 8% 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.)
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