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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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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