Nelson Company purchased equipment and incurred the following costs: Cash price = $55,000 Sales taxes = $4,400 Insurance during transit = $400 Site preparation, installation, and testing= $2,300What amount should be used as the cost basis of the equipment?

Nelson Company purchased equipment and incurred the following costs: Cash price = $55,000 Sales taxes = $4,400 Insurance during transit = $400 Site preparation, installation, and testing= $2,300What amount should be used as the cost basis of the equipment?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 5MC: Ngo Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted to...

See similar textbooks

Related questions

Q: a) Darling Paper Container, Inc. purchased several machines at a total cost of $300,000. The…

Q: HnH Solutions acquired a machine by making the following payments: Net cash price Rs. 116,000…

A: Journal is a place where journal entries are recorded in the book keeping system before ledger…

Q: Oki Company pays $264,000 for equipment expected to last four years and have a $29,000 salvage…

A: Given information is: Oki Company pays $264,000 for equipment expected to last four years and have…

Q: the company paid $750,000 to buy a collection of asset. the asset had the following appraised…

A: The amount paid to buy collection of asset which is also called as basket purchase is to be…

Q: Holiday Laboratories purchased a high speed industrial centrifuge at a cost of $420,000. Shipping…

A: Capitalized cost is the cost incurred to purchase the asset. It includes not only the purchase…

Q: Mareos Company purchased for $3,800,000 a mine estimated to contain 3,000,000 tons of ore. When the…

A: Depreciation per ton (Units of production method) =(cost of Asset - salvage value ) / Estimated…

Q: Oki Company pays $310,150 for equipment expected to last four years and have a $30,000 salvage…

A: A journal entry is the act of recording any transaction, whether one that is economic or not. An…

Q: Celina Company incurred the following research and developments costs in the current year:…

A: Research and Development Expense: Direct expenditures pertaining to a company's efforts to create,…

Q: Sheridan Company incurs the following costs in purchasing equipment: invoice price, $40,500;…

A: Equipment is a kind of fixed asset that a company utilizes in its operations. It is included on the…

Q: Oki Company pays $285,200 for equipment expected to last four years and have a $30,000 salvage…

A: The minor expenses related to fixed assets are recorded as repairs and maintenance expenses. The…

Q: ABC Ltd. Incurred the following costs related to the purchase of a machine: Invoice price Insurance…

A: The costs that are incurred to acquire the assets and further to install the assets, and other cost…

Q: Immortality Co. made the following expenditures relating to a newly invented product Legal and…

A: (1) Legal and registration costs related to a patent on the product 120,000 will be capitalized to…

Q: fund

A: Given: Original cost of unit=P65000 Additional cost=P3000 Shipment cost=P2000 Expected life=10year…

Q: LOQUACIOUS TALKATIVE Co. acquired a piece of factory equipment overseas on a cash basis for…

A: All fixed assets in the business should be capitalised at their purchase cost along with all…

Q: AI Maha Company purchased equipment and had the following costs: Repairing of roof RO 14,750…

A: Cost of acquisition is the cost that an organization recognizes and records the value of an asset in…

Q: ABC Company has an equipment costing P 700,000 with an estimated residual value of P 70,000 and an…

A: Depreciation The purpose of calculating the depreciation cost of the assets to determine the actual…

Q: Tettleton Company incurred the following costs during the current year in con- nection with its…

A: The accounting for research and development specifies that expenditures incurred in this process…

Q: Curry Corporation began operations in the current year. During year it incurred the following…

A: Acquisition cost refers to the purchase cost of inventory or materials. It not only includes the…

Q: ALPHA Company purchased equipment on 1/1/N with an invoice price of $80,000. Purchase taxes $16,000.…

A: Depreciation may be defined as that type of expense which occurs due to decrease in the value of…

Q: AEC purchased an equipment for its manufacturing plant that costs PhP 3 750 000. It is estimated to…

A: In the context of the given question, we are going to compute the book value of the plant after…

Q: Extra Corporation is installing a new machine at its production facility. It has incurred these…

A: Cost of property , plant and equipment includes purchase price ( less trade discount ) , taxes ( if…

Q: livia Company was installing new equipment at its production facility and incurred the following…

A: Cost of equipment includes the cost involved in acquiring the new equipment.

Q: A contracting company purchased a new equipment at a cost of $200,000. The delivery and installation…

A: A non-current asset is a fixed asset that is expected to be in use for a long-term period, i.e.,…

Q: What total amount should be capitalized as cost of the machine?

A: Original price is the whole charge related to the acquisition of an asset. The authentic price of an…

Q: AEC purchased an equipment for its manufacturing plant that costs PhP 3,750,000 + 10,000(x). It is…

A: Depreciation seems to be an accounting method for assigning costs of a physical or tangible asset…

Q: Equipment was purchased for RO 120,000. Freight charges were RO 5,600 and there was a cost of RO…

A: “Hey, since there are multiple questions posted, we will answer only one question, as per our…

Q: The following information relates to a machine constructed by ABC Company: Cost of materials to…

A: When machinery is built inside an organization, it is recorded at the value that includes all of the…

Q: Milby company incurred the following research and development costs during the current year:…

A: Depreciation for the equipment = 150000 / 5 years = 30000

Q: AEC purchased an equipment for its manufacturing plant that costs PhP 3,750,000 + 10,000(x). It is…

A: Depreciation under straight-line method = (Historical cost - Salvage value)/Useful life Net Book…

Q: hachine that was acquired at the beginning of the current year: ash paid for machine, including VAT…

A: In order for the cost to be capitalised, all those cost are included which are incurred to bring the…

Q: The following data relate to a firm's purchase of a machine used in the manufacture of its product:…

A: Assets: Properties or things owned by business called Assets. Example: Machinery , furniture etc.

Q: A contractor imported a bulldozer for his job paying P 260,000 to the manufacturer. Freight and…

A: note dear student as per the Q&A guideline we are required to answer the first three subparts…

Q: Richy Limited has plant that cost R345 000 (including vat) on 01 January 2018. Installation and…

A: Capitalized Cost of Asset= Cost of Asset (+) Installation and modification costs (+) Transfer costs…

Q: radpit Inc. has constructed a production equipment needed for the company’s expansion program.…

A: Borrowing costs relating to the acquisition, construction, and production of qualifying assets…

Q: On January 1, 20x1, ABC Company acquired a machine with an invoice price of ₱300,000 subject to a…

A: Discount on payment = invoice price x discount rate = ₱300,000 x 2% = ₱6,000

Q: Tumeng Co. acquired a piece of equipment for 1,000,000 and incurred the following additional costs:…

Q: The Miller Company paid $70,000 to acquire a 100 ton press. Freight charges to deliver the equipment…

A: The amount of equipment should be capitalized the total cost incurred upto the start of operation of…

Q: Wilbert Company purchased factory equipment with an invoice price of $90,000. Other costs incurred…

A: Total Acquisition cost of equipment = Invoice price + Freight cost + Installation, wiring and…

Q: ALPHA Company purchased equipment on 1/1/N with an invoice price of $80,000. Purchase taxes $16,000.…

A: Answer a)

Q: Champion Contractors completed the following transactions involving equipment. Year 1 Paid $314,000…

A: Formulas that are used :-

Q: A machine was purchased at an invoice price of P 300,000, subject to a 2% cash discount if paid…

A: Equipment cost includes: 1. Purchase price (Invoice price less cash discounts) 2. Installation and…

Q: An entity acquired a machine and incurred the following costs: Cash paid for machine, including VAT…

A: Assets: Assets are the resources of an organization used in the business operations to generate…

Q: Unilever acquires land for $86,000 cash. Additional costs are as follows: removal of shed $300,…

A: As per IAS 16 property plant and equipment. Cost of equipment includes all costs that are incurred…

Q: Bonus Corporation is installing a new machine at its production facility. It has incurred these…

A: Net Purchase price = Purchase price - input tax = 2800000-300000 = P2,500000

Q: The components of the cost of a major item of equipment are given below: $ Purchase price 780,000…

A: We have the following information: Purchase price: $780,000 Import duties: $117,000 VAT…

Q: Olivia Company was installing new equipment at its production facility and incurred the following…

A: 1. When assets is initially recognized it includes all the cost which is necessary to bring the…

Q: ABC Company has an equipment costing P 700,000 with an estimated residual value of P 70,000 and an…

A: Costs which are incurred to improve the quality of the asset's output shall be capitalized and form…

Question

Nelson Company purchased equipment and incurred the following costs:

Cash price = $55,000
Sales taxes = $4,400
Insurance during transit = $400
Site preparation, installation, and testing= $2,300
What amount should be used as the cost basis of the equipment?

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!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Garcia Co. owns equipment that costs $76,800, with accumulated depreciation of $40,800. Garcia sells the equipment for cash. Record the journal entry for the sale of the equipment if Garcia were to sell the equipment for the following amounts: A. $47,000 cash B. $36,000 cash C. $31,000 cash
Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.
For each of the following transactions, state whether the cost would be capitalized (C) or recorded as an expense (E). A. Purchased a machine, $100,000; gave long-term note B. Paid $600 for ordinary repairs C. Purchased a patent for $45,300 cash D. Paid $200,000 cash for addition to old building E. Paid $20,000 for monthly salaries F. Paid $250 for routine maintenance G. Paid $16,000 for major repairs
Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of $1,200, paid installation fees of $2,750, pays annual maintenance cost of $250, and received a 10% discount on sales price. Determine the acquisition cost of the equipment.
Ngo Company purchased a truck for $54,000. Sales tax amounted to $5,400; shipping costs amounted to $1,200; and one-year registration of the truck was $100. What is the total amount of costs that should be capitalized? A. $60,600 B. $66,100 C. $54,000 D. $59,400
Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions: Paid shipping of $1,000 Paid installation fees of $2,000 Pays annual maintenance cost of $200 Received a 5% discount on $25,000 sales price Determine the acquisition cost of the equipment.
Prepare journal entries for the following transactions: a. A machine with a cost of 10,000 and accumulated depreciation of 8,000 was sold for 2,500. b. A machine with a cost of 10,000 and accumulated depreciation of 8,000 was traded for a new machine with a market value of 12,000. Cash of 9,500 was also paid.
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
Estimate the average total estimated useful life of depreciable property, plant, and equipment. Starbucks reports 580.6 million of depreciation and amortization in the statement of cash flows, of which 4.5 million relates to amortization of limited-life intangible assets. Does the estimate reconcile with stated accounting policy on useful lives for property, plant, and equipment? Explain.
Utica Corporation paid 360,000 to purchase land and a building. An appraisal showed that the land is worth 100,000 and the building is worth 300,000. What cost should Utica assign to the land and to the building, respectively?
Expenditures After Acquisition Listed below are several transactions: a. Paid $80 cash to replace a minor part of an air conditioning system. b. Paid $40,000 to fix structural damage to a building. c. Paid $8,000 for monthly salaries. d. Paid $12,000 to replace a manual cutting machine with a computer-controlled machine. e. Paid $1,000 related to the annual painting of a building. Required: Classify each transaction as either a revenue expenditure, a capital expenditure, or neither.