Question

Your company just purchased a piece of equipment to be used on your manufacturing floor. In...

  1. Your company just purchased a piece of equipment to be used on your manufacturing floor. In addition to the cost of the machine, please list four other examples of costs that could be capitalized as part of the total cost of this asset: A. B. C. D.
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Answer #1

Answer:

Below are the examples of costs that could be capitalized as part of the total cost of the piece of equipment:

A. Transportation costs

Transportation charges till the installation of the equipment will be capitalized as part of total cost.

B. Installation costs

To put the equipment in a ready to use situation, the installation costs are capitalized which are incurred during purchases.

C. Interest payment on financing the equipment

Any interest paid on the financing of that equipment is included as a part of the total cost of the equipment, till the time equipment is in a put to use condition

D. Labor charges

Labor costs incurred until the final installation of the equipment are included.

In case of any doubt, please comment.

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