Question

Item Skipped eBookItem 3Item 3 Item Skipped A company purchased a commercial dishwasher by paying cash of $5,400. The dishwasher's fair value on the date of the purchase was $5,780. The company incurred $300 in transportation costs, $350 installation fees, and paid a $240 fine for illegal parking while the dishwasher was being delivered. For what amount will the company record the dishwasher

Answer 1

The amount for recording the dishwasher:

Purchase price = $5,400

Transportation costs = $300

Installation fees - $350

Total = $6,050

Step-by-step explanation:

For a newly purchased asset, the costs to include are all the items that can be attributed to its purchase and to putting the asset to use, this includes installation and testing.

An asset is usually recognized at the cost price, for initial recognition. Subsequently, it can be recognized at its fair value.

The fine for illegal parking is not an allowed business expense. As a result, the £240 fine does not form part of the cost of the asset.