Question

Capitalizing costs (LO 11-2) Phoenix Co. acquired a large piece of specialized machinery used in its manufacturing process. The following costs were incurred in connection with the acquisition: Finder’s fee $ 2,000 List price 230,000 Transportation fee 4,000 Speeding ticket during transportation 65 Installation fee 2,500 Cost to repair a door damaged during installation 1,200 Required: Which of the costs incurred by Phoenix Co. should be capitalized to the machinery account?

Answer 1

$ 238,500.00

Step-by-step explanation:

The costs to capitalize in respect of the specialized machinery comprises of the finder's fees of $2,000 ,list price of $230,000,transportation fee of $4000 as well as the installation fee of $2,500

costs to be capitalized=$2,000+$230,000+$4,000+$2,500=$ 238,500.00

The cost of speeding ticket during transportation is not included because it is an actual cost of bringing the asset to its present location

The cost of repair due to damage that occurred during installation is also not included.