Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $179,000 with terms of 3/15,...
Question:
Grab Manufacturing Co. purchased a 10-ton draw press at a cost of $179,000 with terms of 3/15, n/45. Payment was made within the discount period.
Shipping costs were $4,200, which included $390 for insurance in transit. Installation costs totaled $12,200, which included $4,400 for taking out a section of a wall and rebuilding it because the press was too large for the doorway.
The capitalized cost of the 10-ton draw press is?
Fixed Assets:
Fixed Assets are assets held by the company for a long period of time to carry out the normal business operations. The initial measurement of all fixed assets are based on the acquisition cost plus any costs that bring the asset into operations such as installation costs, storage costs and documentation and legal fees to acquire the asset.
Answer and Explanation: 1
| Cost | $179,000 |
|---|---|
| Less: Purchase Discount | |
| $179,000 x 3% | 5,370 |
| Net Purchase | $173,630 |
| Add: | |
| Shipping Costs | 4,200 |
| Insurance in Transit | 390 |
| Installation Cost | 12,200 |
| Demolition of wall | 4,400 |
| Capitalized Cost | $194,820 |
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