Acquisition Cost of Long-Lived Asset The following data relate to a firm\'s purc

ID: 2475598 • Letter: A

Question

Acquisition Cost of Long-Lived Asset The following data relate to a firm's purchase of a machine used in the manufacture of its product: Invoice price $21,000 Applicable sales tax 1,300 Cash discount taken for prompt payment 500 Freight paid 360 Cost of insurance coverage on machine while in transit 225 Installation costs 1,100 Testing and adjusting costs 575 Repair of damages to machine caused by the firm's employees 650 Prepaid maintenance contract for first year of machine's use 400 Determine the acquisition cost of the machine. Acquisition Cost = $

Explanation / Answer

Invoice price

$21,000

Applicable sales tax

1,300

Cash discount taken

(500)

Freight paid

360

Cost of insurance

225

Installation cost

1,100

Testing and adjusting costs

575

Total acquisition cost

$24,060