Question

On March 1, Bartholomew Company purchased a new stamping machine with a list price of $77,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other costs associated with the machine were: transportation costs, $2,000; sales tax paid, $4,520; installation costs, $1,350; routine maintenance during the first month of operation, $1,900. What is the cost of the machine

Answer 1

Answer:

$81,020

Explanation:

The cost of the asset includes the cost of purchase less any given discount or tax returns and the addition of other cost incurred in making the asset available for use.

As such, the cost of the machine

= $77,000 - (5% * $77,000) + $2,000 + $4,520 + $1,350

= $81,020

The routine maintenance cost is not a part of the asset but an expense in p/l.