Kirk Company purchased equipment by making a down payment of P400,000 and issuing a note payable for P1,800,000. A payment of P600,000 is to be made at the end of each year for three years. The applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is 2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the capitalized cost of the equipment?
Kirk Company purchased equipment by making a down payment of P400,000 and issuing a note payable for P1,800,000. A payment of P600,000 is to be made at the end of each year for three years. The applicable rate of interest is 8%. The present value of an ordinary annuity of 1 for three years at 8% is 2.58, and the present value for the future amount of a single sum for three years at 8% is .735. Shipping charges for the equipment of P200,000 and installation charges of P350,000 were incurred. What is the capitalized cost of the equipment?
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 3MC: Electro Corporation bought a new machine and agreed to pay for it in equal annual installments of...
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning