Question

United Van Lines purchased a truck with a list price of $250,000 subject to a 6% discount if paid within 30 days. United Van Lines paid within the discount period. It paid $4,000 to obtain title to the truck with the state and an $800 license fee for the first year of operation. It paid $1,500 to paint the firm’s name on the truck and $2,500 for property and liability insurance for the first year of operation. What acquisition cost of this truck should United Van Lines record in its accounting records?

Answer 1

The company should record the acquisition price, the cost of acquiring the title, and the cost of painting the truck under the acquisition cost of the truck. acquisition cost = $250,000 x 0.94 + 4,0000+ 1,500 = $240,500

The licensing fee and the insurance cost must be expensed in the income statement for the current year.

expensed amount = $800 + 2,500 = $3,300

Step-by-step explanation: