Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881



Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem

Acquisition Cost

Cox Company recently purchased a machine by paying $8,500 cash and signing a 6-month, 10% note for $10,000. In addition to the purchase price, Cox incurred the following costs related to the machine: freight charges, $800; interest charges, $500; special foundation for machine, $400; installation costs, $1,100.


Determine the cost of the machine.

Use the following information for Cornerstone Exercises 7-19 through 7-21:

Irons Delivery Inc. purchased a new delivery truck for $45,000 on January 1, 2019. The truck is expected to have a $3,000 residual value at the end of its 5-year useful life.

To determine

Cost of a Fixed Asset:

Cost of a Fixed Asset is the cost incurred on acquiring the Fixed asset and includes any expenditure which is necessary in preparing the asset for its use.

To calculate:

To determine the cost of the Machine.


Cost of a Plant/Machinery includes the following

  1. The Purchase Price
  2. Sales taxes
  3. Transportation costs
  4. Insurance during transportation
  5. Installation costs
  6. Costs of trial runs.

Here, Purchase cost = $(8500+10000)

Freight charges ...

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