Acquisition Cost On January 1, 2017, Zircon Enterprises purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase: Terms of the purchase were 2/10, net 30. Zircon paid for the purchase on January 8. Freight costs of $1,000 were incurred. A state agency required that a pollution control device be installed on the equipment at a cost of $2,500. During installation, the equipment was damaged and repair costs of $4,000 were incurred. Architect's fees of $4,500 were paid to redesign the work space to accommodate the new equipment. Zircon purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000. Zircon financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016. Required: Determine the acquisition cost of the equipment.
Acquisition Cost On January 1, 2017, Zircon Enterprises purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase: Terms of the purchase were 2/10, net 30. Zircon paid for the purchase on January 8. Freight costs of $1,000 were incurred. A state agency required that a pollution control device be installed on the equipment at a cost of $2,500. During installation, the equipment was damaged and repair costs of $4,000 were incurred. Architect's fees of $4,500 were paid to redesign the work space to accommodate the new equipment. Zircon purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000. Zircon financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016. Required: Determine the acquisition cost of the equipment.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles
Section: Chapter Questions
Problem 8.1E
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Acquisition Cost On January 1, 2017, Zircon Enterprises purchased a piece of equipment with a list price of $60,000. The following amounts were related to the equipment purchase:
Terms of the purchase were 2/10, net 30. Zircon paid for the purchase on January 8.
Freight costs of $1,000 were incurred.
A state agency required that a pollution control device be installed on the equipment at a cost of $2,500.
During installation, the equipment was damaged and repair costs of $4,000 were incurred.
Architect's fees of $4,500 were paid to redesign the work space to accommodate the new equipment.
Zircon purchased liability insurance to cover possible damage to the asset. The three-year policy cost $8,000.
Zircon financed the purchase with a bank loan. Interest of $3,000 was paid on the loan during 2016.
Required: Determine the acquisition cost of the equipment.
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