Question

Yale Company purchased equipment having an invoice price of $21,500. The terms of sale were 2/10, n/30, and Yale paid within the discount period. In addition, Yale paid a $320 delivery charge, $350 installation charge, and $1,183 sales tax. The amount recorded as the cost of this equipment is:
Select one:
a. $21,070.
b. $21,500.
c. $21,740.
d. $22,923.

Answer 1

Answer:

Correct option is D

$ 22,923

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.

The purchase cost less discount = (100-2)% × 21,500= $21,070

The cost of the equipment =  $21,070 + 320 + 350 + 1183

                                             =$ 22,923