Answer:
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:
Purchase price of the land $1,350,000
Demolition and removal of old building 95,000
Clearing and grading the land before construction 225,000
Various closing costs in connection with
acquiring the land 57,000
Architect's fee for the plans for the new building 65,000
Payments to Maxtor for building construction 3,400,000
Equipment purchased 935,000
Freight charges on equipment 47,000
Trees, plants, and other landscaping 60,000
Installation of a sprinkler system for the landscaping 6,500
Cost to build special platforms and install
wiring for the equipment 27,000
Cost of trial runs to ensure proper
installation of the equipment 8,500
