Question

Beerbo purchased a machine on July 1, 2021 for $28,000. Beerbo also paid $200 in title fees; $125 in taxes; $500 in delivery charges; and $475 in installation costs. The machine has an estimated useful life of 6 years and a salvage value of $3,000. What is the total cost that is debited to the MACHINE account

Answer 1

$29,100

Step-by-step explanation:

The cost of an asset which needs to be capitalised is the sum of all costs needed to make the asset usable, it includes purchase price, taxes, installation costs etc.

According to given question following balances will be capitalised in the MACHINE account.

Price $28,000

Title fee $125

Taxes $500

Delivery charges $475

Total cost $29,100