Description Cost Sales Invoice Price $150,000 Sales Tax on Machine 9,000 Cash Di
ID: 2597123 • Letter: D
Question
Description Cost Sales Invoice Price $150,000 Sales Tax on Machine 9,000 Cash Discount on Purchase of Machine 3,000 Freight to deliver machine 1,800 Training of Employees for first-time use 4,100 Repair and maintenance caused by employees 800 Cost of insurance while in transit 900 Modification of Plant to install machine 2,500 Assorted parts for future use 5,400 Installation of machine 1,500 Tuning and adjusting machine before use 1,200 Training of New Employees in Year 3 $4,000 Compute the acquisition cost of the machine
Explanation / Answer
Solution :- Calculation of acquisition cost of the machine :-
= 150000 + 9000 - 3000 + 1800 + 4100 + 800 + 900 + 2500 + 1500 + 1200
= $ 168800.
Conclusion :- Acquisition cost of the machine = $ 168800.
Notes :- (i). Training of new employees in year three amounting to $ 4,000 and Cost of the assorted parts for future use amounting to $ 5,400 will not be added in the cost of machine because the same will debited to profit & loss account as revenue expenses.