Question

Helmway company purchased equipment and these costs were incurred: cash price $21,500 sales taxes $1,800 insurance during transit $320 installation and testing $430 total costs $24,050 presto will record the acquisition cost of the equipment as

Answer 1

Presto will record the acquisition cost of the equipment as $22,250 (21,500+430+320) which is the total cost for making the fixed asset ready for operation. The Generally accepted accounting principle requires a company to record all of the acquisition cost of a fixed asset. Thus, Presto company must capitalize all cost related to the fixed asset.