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 $1) (Use appropriate factor(s) from the tables provided.):
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Purchase price of the land
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$
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1,330,000
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Demolition and removal of old building
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93,000
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Clearing and grading the land before construction
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215,000
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Various closing costs in connection with acquiring the land
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55,000
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Architect's fee for the plans for the new building
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63,000
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Payments to Maxtor for building construction
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3,380,000
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Equipment purchased
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925,000
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Freight charges on equipment
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45,000
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Trees, plants, and other landscaping
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58,000
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Installation of a sprinkler system for the landscaping
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6,300
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Cost to build special platforms and install wiring for the equipment
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25,000
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Cost of trial runs to ensure proper installation of the equipment
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8,300
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Fire and theft insurance on the factory for the first year of use
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37,000
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In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $29,000 cash and signed a non interest-bearing note requiring the payment of $83,000 in one year. An interest rate of 6% 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.
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Assets
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Initial valuation
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Land
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Building
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Equipment
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Land improvements
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Fork lifts
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Prepaid insurance
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