Question

Mark's Markers purchased a new machine to use in the manufacturing process for $2,500. The sales tax was an additional $150 and the shipping charges were $200. One month after using the machine, a small part broke and needed repair. The cost of the repair was $900. What cost amount will be capitalized?

Answer 1

The cost amount that will be capitalized is $2,850.

Step-by-step explanation:

The cost amount that will be capitalized is the initial purchase price of the machine, plus any additional costs necessary to make the machine usable. In this case, Mark's Markers purchased the machine for $2,500, and the sales tax and shipping charges amounted to $150 and $200 respectively. Therefore, the cost amount that will be capitalized is $2,500 + $150 + $200 = $2,850.