Sheridan Industries purchased the following assets and constructed a building as well. All this was done during the current year. Assets 1 and 2: These assets were purchased as a lump sum for $270,000 cash. The following information was gathered. Initial Cost on Description Seller's Books Depreciation to Date on Seller's Books Book Value on Seller's Books Appraised Value Machinery Equipment $270,000 $135,000 $135,000 162,000 27,000 135,000 $243,000 81,000 Asset 3: This machine was acquired by making a $27,000 down payment and issuing a $81,000, 2-year, zero-interest-bearing note. Th note is to be paid off in two $40,500 installments made at the end of the first and second years. It was estimated that the asset could have been purchased outright for $96,930. Asset 4: This machinery was acquired by trading in used machinery. (The exchange lacks commercial substance.) Facts concerning the trade-in are as follows. Cost of machinery traded $270,000 Accumulated depreciation to date of sale 108,000 Fair value of machinery traded 216,000 Cash received 27,000 Fair value of machinery acquired 189,000 Asset 5: Equipment was acquired by issuing 100 shares of $22 par value common stock. The stock had a market price of $30 per shar Construction of Building: A building was constructed on land purchased last year at a cost of $405,000. Construction began on February 1 and was completed on November 1. The payments to the contractor were as follows. Date Payment 2/1 $324,000 6/1 972,000 9/1 1,296,000 11/1 270,000 To finance construction of the building, a $1,620,000, 12% construction loan was taken out on February 1. The loan was repaid on November 1. The firm had $540,000 of other outstanding debt during the year at a borrowing rate of 8%.