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15 December, 13:00

Bad Brads BBQ purchased a piece of equipment by paying $5,000 cash. They also incurred a shipping cost of $400 to get the equipment to its factory. The fair value of this equipment is $7,000. For what amount should Bad Brads BBQ reoord the equipment? A. $5,000. B. $5,400 C. $7,000 D. $7,400.

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Answers (1)
  1. 15 December, 13:03
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    option (B) $5,400

    Explanation:

    Data provided in the question:

    Amount paid for the equipment = $5000

    Shipping cost = $400

    The fair value of this equipment = $7,000

    Now,

    The Brads BBQ should record the amount of equipment as

    = Amount paid for the equipment + Shipping cost

    or

    = $5,000 + $400

    or

    Brads BBQ record the equipment = $5,400

    Hence,

    The correct answer is option (B) $5,400
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