Question

The following expenditures relate to machinery purchased by callabasas manufacturing: purchase price $ 16,000 transportation costs 800 installation 500 testing 2,000 repair of part broken during shipment 300 at what amount should callabasas capitalize the machinery?

multiple choice
a. $19,300
b. $17,300
c. $17,600
d. $19,600

Answer 1

The amount that Callabasas Manufacturing should capitalize for the machinery is $19,600.

Step-by-step explanation:

The amount that Callabasas Manufacturing should capitalize for the machinery is $19,600.

To calculate the capitalized amount, we need to include the purchase price, transportation costs, installation costs, testing costs, and repair costs. The purchase price is $16,000, the transportation costs are $800, the installation costs are $500, the testing costs are $2,000, and the repair costs are $300. Adding all these amounts together gives us: $16,000 + $800 + $500 + $2,000 + $300 = $19,600.

Therefore, Callabasas Manufacturing should capitalize the machinery at $19,600.