Homework Answers
All that cost that has been incurred to acquire the asset would be capitalized and will be included in the cost of the asset that has been purchased.
The main question that arises here is that till what point the cost would need to be included.
This means that if we are buying a machine that has to be installed in our factory than what will that point of time till when we will take the cost that has been incurred to buy that machine.
As per the general rule book all that cost that has been incurred and is concerned with buying an asset or transfer of title will be included in the cost of the asset.
So any cost that has been spent to buy an asset will be included in the cost of asset. This means that any cost that has been incurred after the asset has been purchased or been installed in our site will not to be included in the cost of that particular asset.
Purchase price of land 320000
Legal fees 4100
Delinquent property taxes 6500
Total cost of land 330600
In calculating the total cost for stores, only that cost has been included that has been deemed to be the most necessary one and without such cost the making of store is not possible.
Total cost for stores
Architect fees 30700
Construction cost 850000
Capitalized interest during construction 16000
Landfill 13900
Clearing of Trees' 9600
Land survey fees 4000
Foundation cost 15000
Insurance cost for construction 2200
Sale of timber -3000
Total 938400
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