Question

Corazon Company purchased an asset with a list price of $17,200. Corazon paid $1,300 of transportation in cost, $1,600 to train an employee to operafe the equipment, and $1,000 to insure the asset against theft after it has been set up in the factory. The asset was purchased under terms 1/20, n/30 and Corazon paid for the asset within the discount period. Based on this information. Corazon would capitalize the asset on its books at:

Mutiple Choice
o $519928
o $18,800
o $18628
o $11200

Answer 1

The asset was purchased with terms 1/20, n/30, and Corazon paid within the discount period. Corazon would capitalize the asset on its books at $20,928.

To determine the capitalized cost of the asset on Corazon's books, we need to add up the purchase price and the costs directly attributable to acquiring and preparing the asset for use.First, let's calculate the discount available based on the terms 1/20, n/30. This means that Corazon can receive a 1% discount if the payment is made within 20 days. Since Corazon paid within the discount period, they are eligible for the discount.
Discount available = Purchase price * Discount rate
Discount available = $17,200 * 1%

= $172
subtracting the discount:

Capitalized cost = Purchase price + Transportation cost + Training cost + Insurance cost - Discount
Capitalized cost = $17,200 + $1,300 + $1,600 + $1,000 - $172

= $20,928

To know more about asset visit:

#SPPJ11