A hotel recently purchased new exercise equipment for its exercise room. The following information refers to the purchase and installation of this equipment: The list price of the equipment was USD400,000; however, the hotel qualified for a “special discount” of USD15,000. It paid USD100,000 cash for the equipment and issued a three-month, 15% note payable for the remaining balance. The note, plus accrued interest charges, was promptly paid at maturity date.In addition to the amounts describe in letter a, the hotel paid sales taxes of USD21,000 at the date of the purchase.Freight charges for delivery of equipment totaled USD6,000.Installation and training costs related to the equipment amounted to USD9,000.During installation, one of the pieces of equipment was accidentally damaged by an employee. It cost the motel USD4,000 to repair this damage.As soon as the equipment was installed, the motel paid USD3,200 to print brochures featuring the exercise room’s new, state-of-the-art exercise facilities and paid USD54,000 for a one-year insurance coverage of the exercise facilities.Compute the total cost debited to the hotel’s Equipment account.

SOLUTION EQUIPMENT ACCOUNT IS A NON CURRENT OR LONG TERM ASSET ACCOUNT WHICH REPORT THE COST OF…

Answered: hotel recently purchased new exercise…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 9RE: Dexter Construction Corporation is building a student condominium complex; it started construction...

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A hotel recently purchased new exercise equipment for its exercise room. The following information refers to the purchase and installation of this equipment:

The list price of the equipment was USD400,000; however, the hotel qualified for a “special discount” of USD15,000. It paid USD100,000 cash for the equipment and issued a three-month, 15% note payable for the remaining balance. The note, plus accrued interest charges, was promptly paid at maturity date.
In addition to the amounts describe in letter a, the hotel paid sales taxes of USD21,000 at the date of the purchase.
Freight charges for delivery of equipment totaled USD6,000.
Installation and training costs related to the equipment amounted to USD9,000.
During installation, one of the pieces of equipment was accidentally damaged by an employee. It cost the motel USD4,000 to repair this damage.
As soon as the equipment was installed, the motel paid USD3,200 to print brochures featuring the exercise room’s new, state-of-the-art exercise facilities and paid USD54,000 for a one-year insurance coverage of the exercise facilities.

Compute the total cost debited to the hotel’s Equipment account.

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