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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: (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
$1,360,000
Demolition and removal of old building
96,000
Clearing and grading the land before construction
230,000
Various closing costs in connection with acquiring the land
58,000
Architect's fee for the plans for the new building
66,000
Payments to Maxtor for building construction
3,410,000
Equipment purchased
940,000
Freight charges on equipment
48,000
Trees, plants, and other landscaping
61,000
Installation of a sprinkler system for the landscaping
6,600
Cost to build special platforms and install wiring for the equipment
28,000
Cost of trial runs to ensure proper installation of the equipment
8,600
Fire and theft insurance on the factory for the first year of use
40,000
In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $32,000 cash and signed a noninterest-bearing note requiring the payment of $86,000 in one year. An interest rate of 9% 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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