Question

On March 1, Wright Company purchased new equipment for $50,000 by paying cash. Other costs associated with the equipment were: transportation costs, $1,000; sales tax paid $4,000; and installation cost, $2,500. At what amount will the equipment be recorded on a balance sheet? O $51,000 O $53,500. O $54,000 $57,500.

Answer 1

Correct answer----------$57,500

Working

Cost of equipment	$ 50,000.00
Transportation cost	$    1,000.00
Sales tax on equipment	$    4,000.00
Installation cost	$    2,500.00
Total cost of equipment to be capitalized	$ 57,500.00

.Al costs associated with bringing an asset to its intended use are capitalized such as transportation, sales tax on asset, installation etc.