Determine acquisition costs of each of assets able acquired

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Assignment

Able Corporation purchased land as a factory site and contracted with Ready Construction to construct a factory. Able made the following expenditures related to the acquisition of the land, building, and machinery to equip the factory:

Purchase price of the land

1,400,000

Demolition and removal of old building

60,000

Clearing and grading the land before construction

145,000

Various closing costs in connection with acquiring the land

32,000

Architect's fee for the plans for the new building

70,000

Payments to LuLu for building construction

3,350,000

Machinery purchased

855,000

Freight charges on machinery

31,000

Trees, plants, and other landscaping

47,000

Installation of a sprinkler system for the landscaping

3,000

Cost to build special platforms and install wiring for the machinery

11,000

Cost of trial runs to ensure proper installation of the machinery

6,000

Fire and theft insurance on the factory for the first year of use

24,000

In addition to the above expenditures, Able purchased four forklifts from Fleet Street. In payment, Able paid $18,000 cash and signed an interest-bearing note requiring the payment of $50,000 at the end of one year. An interest rate of 8% properly reflects the time value of money for this type of loan.

Required:

Determine the acquisition costs of each of the assets Able acquired in the above transactions for land, building, machinery, land improvements, forklifts, and prepaid insurance. You must show the details of each category to receive credit.

Reference no: EM131533017

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