Question

Corazon Company purchased an asset with a list price of $14,000. Corazon paid $500 of transportation in cost, $800 to train an employee to operate the equipment, and $200 to insure the asset against theft after it has been setup in the factory. The asset was purchased under terms 1/20/n30 and Corazon paid for the asset within the discount period. Based on this information, Corazon would capitalize the asset on its books at:_______

a. $14,000.
b. $14,660.
c. $15,160.
d. $14,800.

Answer 1

c. $15,160.

Step-by-step explanation:

The computation of the amount that should be capitalized is shown below:

= Purchase price + transportation + training cost - discount

= $14,000 + $500 + $800 - 1% of $14,000

= $14,000 + $500 + $800 - $140

= $15,160

Hence, the amount that should be capitalized is $15,160

Therefore the option c is correct

We simply applied the above formula