Question

Trinkle Company made several purchases of long-term assets during the year. The details of each purchase are presented here.

New Office Equipment

1. List price: $43,200; terms: 2/10, n/30; paid within the discount period.

2. Transportation-in: $720.

3. Installation: $490.

4. Cost to repair damage during unloading: $544.

5. Routine maintenance cost after eight months: $260.

Basket Purchase of Copier, Computer, and Scanner for $51,300 with Fair Market Values

1. Copier, $26,574.

2. Computer, $11,742.

3. Scanner, $23,484.

Land for New Warehouse with an Old Building Torn Down

1. Purchase price, $80,000.

2. Demolition of building, $5,280.

3. Lumber sold from old building, $1,260.

4. Grading in preparation for new building, $8,500.

5. Construction of new building, $261,000.

Required

In each of these cases, determine the amount of cost to be capitalized in the asset accounts.

Answer 1

in cost capitalization only cost that related to fixed asset is taken in to consideration and other cost is to be ignored.

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