Tyson Chandler Company purchased equipment for $145,000. The shipping cost was $5,000. Tyson spent an additional...
Tyson Chandler Company purchased equipment for $145,000. The shipping cost was $5,000. Tyson spent an additional $25,000 testing and preparing the equipment for use. What amount should Tyson record as the cost of the equipment?
A. $135,000
b. $150,000
c. $165,000
D. $175,000
Homework Answers
OPTION D: $175000
EXPLANATION:
Along with purchase price of asset, the incidental expemses incurred to bring the asset to present location and conditions are also needed to be capitalised to asset account.
therefore,
cost of the equipment = purchase price + shipping cost + testing and preparation costs
= $145000 + $5000 + $25000
= $175000
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