Ask Question
14 November, 05:53

On August 1, 2017, Mendez Corporation purchased a new machine on a deferred payment basis. A down payment of $4,000 was made and 4 annual installments of $24,000 each are to be made beginning on September 1, 2017. The cash equivalent price of the machine was $92,000. Due to an employee strike, Mendez could not install the machine immediately, and thus incurred $1,200 of storage costs. Costs of installation (excluding the storage costs) amounted to $3,200. The amount to be capitalized as the cost of the machine is

$92,000.

$95,200.

$96,400.

$104,000.

+4
Answers (1)
  1. 14 November, 06:09
    0
    cost of the machine to be capitalized = $95,200

    Explanation:

    given data

    down payment = $4,000

    time = 4

    installments = $24,000

    cash equivalent price = $92,000

    storage costs = $1,200

    Costs of installation = $3,200

    to find out

    he amount to be capitalized as the cost of the machine is

    solution

    we know here that cost of the machine to be capitalized here is express as

    cost of the machine to be capitalized = Cash equivalent price of the machine + cost of installation ... 1

    put here value we get

    cost of the machine to be capitalized = $9200 + 3200

    cost of the machine to be capitalized = $95,200

    so correct option is $95,200
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “On August 1, 2017, Mendez Corporation purchased a new machine on a deferred payment basis. A down payment of $4,000 was made and 4 annual ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers