Asked by Gabriel Matar on Jun 18, 2024
Verified
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?
A) $57,500.
B) $54,000.
C) $51,000.
D) $53,500.
Transportation Costs
Expenses incurred in moving goods or materials from one location to another, including shipping fees, freight, and logistics services.
Sales Tax
A tax imposed by a government on the sale of goods and services, usually calculated as a percentage of the retail price.
- Acquire knowledge on how the capitalization versus expense recognition impacts the portrayal of financial statements.
Verified Answer
DM
deliah mooneyJun 24, 2024
Final Answer :
A
Explanation :
The equipment will be recorded at $57,500, which includes the purchase price ($50,000) plus transportation costs ($1,000), sales tax paid ($4,000), and installation cost ($2,500), totaling $57,500.
Learning Objectives
- Acquire knowledge on how the capitalization versus expense recognition impacts the portrayal of financial statements.