Anchor Company purchased a manufacturing machine with a list price of $86,000 an

Question

Anchor Company purchased a manufacturing machine with a list price of $86,000 and receive delivered under terms FOB shipping point, and freight costs amounted to $2,400. Anchor paid $3,300 to have the machine installed and tested Insurance costs to protect the asset from fire and thet amounted to $4,200 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be d a 2% cash discount on the purchase. The machine was Multiple Choice $86,680 $89,980 $34.280 94,180

Explanation / Answer

B. $89,980

Computation of cost to be recorded in the asset account:

Price of the machine, net of discount $84,280 Freight $2,400 Installation $3,300 Total capital expenditure to be recorded $89,980

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