Question

Costs of Acquiring Fixed Assets Melinda Stoffers owns and operates ABC Print Co. During February, ABC incurred the following costs in acquiring two printing presses. One printing press was new, and the other was purchased from a business that recently filed for bankruptcy. a. Indicate which costs incurred in acquiring the new printing press (1-6 below) should be debited to the asset account. Item Debited to asset account 1. Fee paid to factory representative for installation OOON 2. Freight 3. Insurance while in transit 4. New parts to replace those damaged in unloading 5. Sales tax on purchase price 6. Special foundation b. Indicate which costs incurred in acquiring the used printing press (7-12 below) should be debited to the asset account. Item Debited to asset account 7. Fees paid to attorney to review purchase agreement 8. Freight 9. Installation 10. Repair of damage incurred in reconditioning the press 11. Replacement of worn-out parts 12. Vandalism repairs during installation

Answer 1

a		Debited to asset account
1	Fee paid to factory representative for installation	Yes
2	Freight	Yes
3	Insurance while in transit	Yes
4	New parts to replace those damaged in unloading	No
5	Sales tax on purchase price	Yes
6	Special foundation	Yes
b		Debited to asset account
7	Fees paid to attorney to review purchase agreement	Yes
8	Freight	Yes
9	Installation	Yes
10	Repair of damage incurred in reconditioning the press	No
11	Replacement of worn-out parts	Yes
12	Vandalism repairs during installation	No