ACTIVITY 2

DEF Co. commenced operations on January 1, 2018. During the following year, the company acquired a tract of land, demolished the building on the land and built a new factory. Equipment was acquired for the factory and in September 2019, the plant was ready to commence operation. A gala opening was held on September 18, with the City Mayor opening the factory. The first items were ready for sale on September 25.

During the period the following cash inflows and outflows iccured.

a) While searching for a suitable block of land, DEF Co. placed an option to buy with three real estate agents at a cost of 1,000 each. Payment of option fees

b) Receipt of loan from bank

c) Payment to settlement agent for title search, duties, and settlement fees

d) Payment of deliquent property taxes assumed by Star

Company

e) Payment for land

f) Payment for demolition of old building

g) Proceeds from sale of material from old building

h) Payment to architect

i) Payment to City Hall for approval of building construction

j) Payment for safety fence around construction site

i) Payment to construction contractor for factory building

k) Payment for external driveways, parking bays and safety lighting

l) Payment of interest on construction loan

m) Payment for safety inspection on building

n) Payment for equipment

o) Payment of freight and insurance costs on delivery of equipment

p) Payment of installation cost on equipment

q) Payment for safety equipment surrounding equipment

r) Payment for removal of safety fence

s) Payment for new fence surrounding the factory

t) Payment for advertisements in the newspaper about the forthcoming factory and its benefits to the community

u) Payment for opening ceremony

v) Payments to adjust equipment to more efficient operating levels subsequent to initial operation 3,000.00

3,000,000.00

100,000.00

50,000.00

1,000,000.00

120,000.00

55,000.00

230,000.00

120,000.00

34,000.00

2,400,000.00

540,000.00

400,000.00

30,000.00

640,000.00

56,000.00

120,000.00

110,000.00

20,000.00

80,000.00

5,000.00

60,000.00

33,000.00

REQUIRED: Identify the costs of the following:

1 Land

2 Building

3 Land Improvements

4 Equipment

5 Expenses (excluding depreciation)