Question

Chocolate Supreme purchased new baking equipment for $15,000 subject to terms 4/10, n/45. The discount was taken. Additional costs included $900 in sales tax and $300 for installation. The total cost to be added to the machinery account is

Answer 1

Answer:

Cost of machine  =$ 15600

Explanation:

According to International Accounting standards (IAS) 16 property plan and equipment (PPE), the cost of an asset is the purchase cost plus other costs of bringing it to the intended working conditions.

So we will add the purchase cost to the cost of delivery, tax and installation.

Note the discount is 4%

The purchase cost less discount = (100-4)% × 15,000= $14,400

The cost of the equipment = $14,400 + 900 + 300

=$ 15,600