A company purchased new equipment for $47,000. The company paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $2,900; sales tax paid $3,700; and installation cost, $3,300. The cost recorded for the equipment was:

Question

Addie

Business

16 September, 01:01

A company purchased new equipment for $47,000. The company paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $2,900; sales tax paid $3,700; and installation cost, $3,300. The cost recorded for the equipment was:

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Harley Callahan · Answer 1

the cost recorded for the equipment was: $46,600

Explanation:

Cost of a Property, Plant and Equipment item in terms of IAS 16 includes the Purchase price and any directly attributable cost of bringing the asset in the location and condition required by managers to operate.

But exclude refundable purchase taxes such as value added tax or sales tax.

Calculation of Cost of Equipment:

Purchase Price $47,000

Add Transport cost $2,900

Less Sales tax ($3,300)

Cost of Equipment $46,600

Conclusion:

Thus the cost recorded for the equipment was: $46,600