Question

# A new machine with a purchase price of \$95,758.00, with transportation costs of \$9,679.00, installation costs...

A new machine with a purchase price of \$95,758.00, with transportation costs of \$9,679.00, installation costs of \$5,439.00, and special acquisition fees of \$2,689.00. Calculate a cost basis. Select the correct answer \$95,758.00 O\$103,886.00 O\$101,197.00 O\$113,565.00 Previous Next 203 PM a 8/6/2019

Correct answer - (D) \$113565

A long term asset like machinery is capitalized on the balance sheet at the time of purchase and this value is its cost basis which includes all expenses which bring the asset to make it in use and further on it will be depreciated over the time of use.

The cost basis of the machine:

• = Purchase price + Transportation costs + Installation costs + Special acquisition fees
• = \$95758+\$9679+\$5439+\$2689
• = \$113565

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