A new machine with a purchase price of $90,000, transportation costs of $8,000, installation costs of $6,000, and special handling fees of $2,000, would have a cost basis of:
Fixed assets are non-current or tangible assets that include property, plant, and equipment (PPEs). Their cost is composed of the purchase price and other costs related to acquiring the asset. These additional costs include import duties, delivery and installation of the asset, or even dismantling and removal costs of the asset when it is no longer in service. Equipment is subject to depreciation.
Answer and Explanation: 1
All of the costs incurred are capitalizable and are part of the cost basis as they are all necessary to place the machine to its intended condition.
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fromChapter 3 / Lesson 10
Learn the definition of fixed assets and examine their importance. Explore the various types of fixed assets, identify their characteristics, and see examples.