Salvia Company recently purchased a truck. The price negotiated with the dealer was $42,500. Salvia also paid sales tax of $2,500 on the purchase, shipping and preparation costs of $3,500, and insurance for the first year of operation of $4,500. At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense

Question

Misael Glenn

Business

23 August, 14:05

Salvia Company recently purchased a truck. The price negotiated with the dealer was $42,500. Salvia also paid sales tax of $2,500 on the purchase, shipping and preparation costs of $3,500, and insurance for the first year of operation of $4,500. At what amount should the truck be recorded on the balance sheet prior to recording depreciation expense

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Answers (1)

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Beatrice Mueller · Answer 1

Answer: The amount to be recorded prior to deprecation is $48,500

Explanation:

To record the cost of the Truck on a balance sheet, prior to deprecation expenses. We need to add up all the cash spent in purchasing the truck. This are, how much task to be levied on the truck, how much the truck will cost and also how much it cost in shipping and preparation. This are the cash spent in acquiring the truck.

Therefore;

$42,500 + $2,500 + $3,500 = $48,500

Insurance premium cost will not be added, because it is not among the amount spent to acquire the truck.