Question

Edmonton Ice Rink purchased a Zamboni ice-resurfacing machine for $21,000, terms 2/10, n/60, FOB shipping point. Edmonton Ice received a freight invoice from On-time Delivery for $380. Edmonton Ice took advantage of the discount. The Zamboni required a special steel mounting and power connections costing $915, and another $555 was paid to paint the home team colours on the Zamboni and get it into operation. In moving the Zamboni onto its steel mounting, it was banged and damaged. The repairs cost $310. Also, $240 of labour costs were incurred in calibrating (adjusting) the machine so that it would be at the right height on the ice. These adjustments were normal and were not a result of the damage. Special insurance was needed for the new ice cleaning machine, which will cost $200 per month for the next year. Prepare a calculation to show the cost of this machine for accounting purposes. (Negative answer should be indicated by a minus sign.) Total acquisition costs

Answer 1

Amount 21,000 -420 380 Particulars Purchase price of ice-resurfacing machine (-) Discount availed (21000*2%) (+) Freight charges from shipping point to place of delivery (+) Power connections (+) Painting (+) Repair costs before operations (+) Labor costs for caliberation Total Acquistion costs 915 555 310 240 22,980 $ The total acquisition cost of this machine is $ 22,980. Note The insurance amount of $ 200 per month does not form part of the cost as it is incurred after the commencement of commercial operation and does not add any value to the machine.

Answer 2