Question

Silver Company purchased a machine for use in the business. The purchase price was $55,000 and the related sales tax totaled $500. Sliver paid $1,000 to have the machine delivered to its factory and $2,000 to have it assembled. Over the five-year life of the machine, maintenance cost of $800 will be incurred annually. What is the capitalized cost of this asset?

Answer 1

Capitalized cost will be $58500

Step-by-step explanation:

We have given that the purchase price = $55000

Related sale tax = $500

Transportation cost = $1000

Assembling cost = $2000

Maintenance cost = $800

We have to find the capitalized cost

So capitalized cost is given by

Capitalized cost = 55000+500+1000+2000 = $58500 ( As maintenance cost is not included in capitalized cost )

So capitalized cost will be $58500