Question

Melinda Stoffers owns and operates ABC Print Co. During February, ABC incurred the following costs in acquiring two printing presses. One printing press was new, and the other was purchased from a business that recently filed for bankruptcy. Indicate which costs incurred in acquiring the new printing press that should be debited to the asset account.
a. Fee paid to factory representative for installation
b. Freight
c. Insurance while in transit
d. New parts to replace those damaged in unloading

Answer 1

Answer:

The answer is below

Explanation:

a. Fee paid to factory representative for installation - DEBITED to Asset account

b. Freight - DEBITED to Asset account

c. Insurance while in transit - DEBITED to Asset account

d. New parts to replace those damaged in unloading - NOT DEBITED to Asset account

To understand which costs incurred in acquiring the new printing press should be debited to the asset account, it should be noted that "new parts to replace those damaged in unloading" does not lead to improvement in assets, hence, it should be considered as Expense instead of being devoted into the asset account.