Jonathan Hubert purchased a local bookstore, and puchased some state of the art
ID: 2560162 • Letter: J
Question
Jonathan Hubert purchased a local bookstore, and puchased some state of the art equipment before opening. The carpentry work to prepare for the installation was $15,000. The invoice price of the equipment was $125,000. Additional costs were $3,000 for deliver and $750 for insurance during transportation. During the installation, the drawer for the cash register was broken. The cost of repairing this was $300. What is the cost that should be capitalized of the store's equipment? If any values are not included, please state why.
Explanation / Answer
Invoice price :-. 125,000
Additional costs:
Delivery cost - 3000
Insurance -. 750. 3750
Carpentery work for installation. 15000
Total cost should be capitalized 143,750
The repairing cost of broken cash register will not be included as it is an abnormal loss. And abnormal loss always charge from profit and loss A/C.
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