Question

LAR Corp. purchased a commercial dishwasher by paying cash of $8,000. The dishwasher's fair value on the date of the purchase was $10,000. The company incurred $400 in transportation costs, $600 installation fees, and paid $300 annual insurance on the equipment. For what amount will LAR record the dishwasher

Answer 1

9,000

Step-by-step explanation:

The original cost of an asset takes into consideration all of the items that can be attributed to its purchase and to putting the asset to use.

Amount at which dishwasher is recorded = Cost + Transportion cost + Installation fee

Amount at which dishwasher is recorded = $8,000 + $400 + $600

Amount at which dishwasher is recorded = $9,000

Note: Insurance is recorded as an expense.