Question

New Office Equipment List price: $37,200; terms: 2/10, n/30; paid within the discount period. Transportation-in: $870. Installation: $520. Cost to repair damage during unloading: $682. Routine maintenance cost after eight months: $240. Basket Purchase of Copier, Computer, and Scanner for $52,400 with Fair Market Values Copier, $26,502. Computer, $10,096. Scanner, $26,502. Land for New Warehouse with an Old Building Torn Down Purchase price, $83,300. Demolition of building, $5,350. Lumber sold from old building, $2,920. Grading in preparation for new building, $9,500. Construction of new building, $206,000. Required In each of these cases, determine the amount of cost to be capitalized in the asset accounts. Office equipment: Basket purchase: Land and building:

Answer 1

Amount of cost to be capitalized in the asset accounts are as calculated below:

Office Equipment
List Price	37,200
Less: Discount (37,200*2%)	-744
Transportation In	870
Installation	520
Cost of Office equipment	37,846

Basket Purchase	Fair Value	Percentage		Apportionment
Copier	$26,502	26,502/63,100	0.42	52,400*0.42	$22,008
Computer	$10,096	10,096/63,100	0.16	52,400*.16	$8,384
Scanner	$26,502	26,502/63,100	0.42	52,400*0.42	$22,008
Total	$63,100		1		$52,400

Building

	Amount ($)
Construction of new building	206,000
Land for New Warehouse with an Old Building Torn Down Purchase price	83,300
Demolition of building	5,350
Lumber sold from old building	-2,920
Grading in preparation for new building	9,500
Cost of Land and Building	301,230