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21 November, 14:20

Silver Company purchased a machine for use in the business. The purchase price was $55,000 and the related sales tax totaled $500. Sliver paid $1,000 to have the machine delivered to its factory and $2,000 to have it assembled. Over the five-year life of the machine, maintenance cost of $800 will be incurred annually. What is the capitalized cost of this asset?

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  1. 21 November, 14:31
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    Capitalized cost will be $58500

    Explanation:

    We have given that the purchase price = $55000

    Related sale tax = $500

    Transportation cost = $1000

    Assembling cost = $2000

    Maintenance cost = $800

    We have to find the capitalized cost

    So capitalized cost is given by

    Capitalized cost = 55000+500+1000+2000 = $58500 (As maintenance cost is not included in capitalized cost)

    So capitalized cost will be $58500
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