Answer: <em>Acquisition cost</em> of Truck for <em>United Van Lines</em>= List Price - Discount Availed + Truck title fees paid + Cost incurred on painting the Truck
= $ 250,000 - (.06 i.e. 6%) * $ 250,000 + $ 4,000 + $ 1500
= $ 250,000 - $ 15,000 + $ 4,000 + $ 1,500
= $ 240000 + $ 5500= $ 245500
License fees of $ 800 and property and liability insurance of $ 2,500 will both be debited to <em>United Van Lines</em> P&L A/c.
Explanation: The items of list price, discount availed, truck title fees paid and cost incurred on painting the Truck are all included in capital expenditure i.e. one time expenditure of <em>United Van Lines</em>, thus they are all included in the <em>acquisition cost</em> of the truck.
The items of license fees and property and liability insurance of $ 800 and $ 2,500 respectively are both revenue expenditures i.e. repetitive expenditures, hence they both will be debited to P&L A/C as follows-
License fees a/c Dr. $ 800
Property and liability insurance a/c Dr. $ 2,500
To P&L a/c $3,300
(License fees and property and liabilty insurance paid for 1st Year)