Teradene Corporation purchased land as a factory site and contracted with Maxtor

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 machinery to equip 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.):

  

In addition to the above expenditures, Teradene purchased four forklifts from Caterpillar. In payment, Teradene paid $26,000 cash and signed a noninterest-bearing note requiring the payment of $80,000 in one year. An interest rate of 7% properly reflects the time value of money for this type of loan.

  

Determine the initial valuation of each of the assets Teradene acquired in the above transactions.

Land =

Building

Machinery =

Land Improvements =

Fork Lifts =

Prepaid insurance =

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 machinery to equip 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.):

Explanation / Answer

Valuation of land:

Valuation of building

Valuation of machinery:

Valuation of land improvements;

Valuation of forklifts = 26,000 + 80,000 + 5,600 = $ 111,600

Prepaid insurance is $ 34,000

$ Purchase price 1,300,000 Demolition of building 90,000 Clearing and grading 200,000 Closing costs 52,000 Total valuation 1,642,000

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