ABC Company purchased a vehicle on January 1. The purchase price was $49,820. They also paid...
Question:
ABC Company purchased a vehicle on January 1. The purchase price was $49,820.
They also paid $2,990 of sales tax, $650 of freight charges, $780 to have the company logo placed on the side of the vehicle, and $1,240 for a repair that occurred as a result of an accident on January 6th while it was sitting in the parking lot waiting to have the logo added.
What is the acquisition cost ABC Company should debit to the Vehicle account when adding this asset to its books?
Acquisition Cost:
The acquisition cost of the asset is the normal costs incurred to bring the asset at the workplace in the ready to use condition. It includes the fright-in expense and the installation cost.
Answer and Explanation: 1
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View this answerThe acquisition cost that ABC Company should debit to the Vehicle account is $53,460.
Compute the acquisition cost as follows: -
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How to Record Asset Acquisition, Disposal & Impairment in Accounting
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Chapter 11 / Lesson 2
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Accountants must clearly record the acquisition, disposal, and impairment of a company's or individual's assets. Review these accounting concepts specific to assets, including acquisition, basket purchases, retirement, disposal, and impairment.
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