e. None of these aniitTt A prefabricated steel storage shed is purchased for $20
ID: 2328583 • Letter: E
Question
e. None of these aniitTt A prefabricated steel storage shed is purchased for $20,000 cash and a $80,000 interest-bearing note payable over a 5-year period at an annual interest rate of 10 percent per annum. The cost to be recorded as an asset (in addition to the S100,000 purchase price) should include all of the following except a. shipping and handling charges. b. insurance while in transit. e. interest on the note payable d. reassembly and installation costs. e. All of these answer choices are costs to be recorded as assets.Explanation / Answer
1. cost to be recorded as an asset is e. all of these answer choices are costs to be recorded as an asset.
explanation:
As per the accounting rule fixed asset cost shall include all those cost which are mandatory to bring the asset to the required location and in the working condition including any financing charges if any. So, it will include all the expenses such as shipping, insurance, material handling, interest charges etc.
2. The salary expense on the income statement for 2014 was c. $ 489500
Explanation:
According to the accural method of accounting expenses which are incurred during the year shall be debited to the income statement irrespective of whether it is actually been paid or not. hence,
Accured salary expense= Salary paid+ salary payable at the end of the year-salary payable at the beginning of the year
=$ 481000+61500-53000
= $ 489500
please note that salary payable at the beginning of the year belong to the previous year and hence subracted. and salary payable in current year belongs to cureent year and hence added.
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