Intel buys a manufacturing machine for $100,000 for use in making computer processors. The company also...
Intel buys a manufacturing machine for $100,000 for use in making computer processors. The company also paid 7% ($7,000) sales tax on the machine. It cost $3,000 to ship the machine to the manufacturing plant. Intel paid an additional $1,500 to have the machine installed and tested for initial use. Each month, the machine requires $1,000 worth of oil and supplies to keep running.
What is the machine's original cost basis (also called book value) that the firm records on the balance sheet?
Homework Answers
| Machine Cost | $100,000 | ||
| Sales Tax | $7,000 | ||
| Shipping Cost | $3,000 | ||
| Machine's original cost basis | $110,000 | ||
| Note: Each month $1,000 worth of oil and supplies require to keep running | |||
| the machine is not be capitalized as it is recurring expenses per month reuire. | |||
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