Question

Oval Company acquired a machine that involved the following expenditures and related factors: Gross invoice price $76,000 Sales tax 2,850 Cash discount taken 1,140 Freight 1,350 Assembly of machine 1,800 Installation of machine 2,700 Assorted spare parts for future use 5,400 Tuning and adjusting machine before use 900 The initial accounting cost of the machine should be:

Answer 1

$78,760

Step-by-step explanation:

Cost of Machine include Purchase Price plus any costs directly incurred in bringing the asset in location and condition intended for use by management.

Calculation of Cost of Machine

Purchase Price $76,000

Sales Tax ($2,850)

Cash discount ($1,140)

Freight $1,350

Assembly Cost $1,800

Installation Cost $2,700

Tuning and adjusting $900

Total Cost $78,760