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

Desert State University installed a HD video board with an invoice price of $5,000,000 in its football stadium. Desert State paid an additional $100,000 of delivery and installation costs relating to this board. Because this is one of the largest boards in the world, Desert State also installed ten 5-ton air conditioning units at a total cost of $120,000 to keep the board cool in the desert heat.


Determine the cost of the video board.

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 compute:

To determine the cost of Video board.


Cost of a Plant/Machinery includes the following

  • The Purchase Price
  • Sales taxes
  • Transportation costs
  • Insurance during transportation
  • Installation costs
  • Costs of trial runs.

Here, the purchase price = $5,000,000

installation cost =$100,000

Note: Th...

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