Question

The cost at which a company records purchases of machinery and plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs? (Check all that apply.)

A. Testing
B. Shipping charges
C. Fines incurred for failing to get the correct permits
D. Assembling
E. Repairs necessary for damages incurred during installation

Answer 1

The costs that should be included are testing, shipping charges, assembling, and repairs necessary for damages. Fines incurred for failing to get the correct permits should not be included.

Step-by-step explanation:

The costs that should be included in the cost of recording purchases of machinery and plant assets are:

• Testing: The cost of testing the machinery or equipment to ensure it is functioning properly before use.
• Shipping charges: The cost of transporting the machinery or equipment to the company's location.
• Assembling: The cost of assembling the machinery or equipment after it has been delivered.
• Repairs necessary for damages incurred during installation: The cost of repairing any damages that occurred during the installation process.