Question

Trinkle Co., Inc. made several purchases of long-term assets in Year 1. The detalls of each purchase are presented here. New Office Equipment 1. List price: $37100 terms: 2/10 n/30: pald within discount period. 2. Transportation-In: $740. 3. Installation: $570 4. Cost to repair damage during unloading: $536. 5. Routine maintenance cost after six months: $290 Basket Purchase of Copier, Computer, and Scanner for S53,100 with Falr Market Values 1. Copier $23.680 2. Computer, $6,400 3. Scanner, $33,920 Land for New Warehouse with an Old Bullding Torn Down 1. Purchase price, $82,200. 2. Demolition of building. $5,200 3. Lumber sold from old bulding, $1.710. 4. Grading In preparation for new bulding. $6,200. 5. Construction of new bullding. $242.000. Required In each of these cases, determine the amount of cost to be capitelized in the asset accounts. Office equlpment: Asset Allocated Costs Office equipment Basket purchase: Asset Copier Computer Scanner Total

Answer 1

Office equipment:

Asset	Allocated Costs
Office equipment	$                 37,668

Basket purchase:

Asset	Allocated Costs
Copier	$                 19,647
Computer	$                   5,310
Scanner	$                 28,143
Total $	$                 53,100

Land and building:

Asset	Allocated Costs
Cost of land	$                 91,890
Construction costs	$             2,42,000
Total cost	$             3,33,890

Working:

Office equipment:
List price	37100
Discount (2% x $37100)	-742
Transportation-in	740
Installation	570
Total cost $	37668

Basket purchase:
Asset	Fair Value	% of total fair value	Purchase Price	Allocated Costs
Copier	23680	37.0%	53100	19647
Computer	6400	10.0%	53100	5310
Scanner	33920	53.0%	53100	28143
Total $	64000			53100

Land and building:
	Land	Building
Purchase price	82200
Demolition of building	5200
Lumber sold from old building	-1710
Grading in preparation for new building	6200
Construction of new building		242000
Total $	91890	242000