moneyromo6932 moneyromo6932

21-11-2022
Business

Answered

anchor company purchased a manufacturing machine with a list price of $87,000 and received a 2% cash discount on the purchase. the machine was delivered under terms fob shipping point, and transportation costs amounted to $2,600. anchor paid $3,600 to have the machine installed and tested. insurance costs to protect the asset from fire and theft amounted to $4,600 for the first year of operations. what is the cost of the machine?

Answer :

KirtiVT4 KirtiVT4

24-11-2022

The cost of the machine is $91,460.

What is the cost?

A cost is the amount of money that has been spent to produce something or provide a service and is thus no longer accessible for use. In business, the cost could be one of acquisition, in which case the money spent to obtain it is recognized as cost. In this situation, money is the input that is used to purchase the item.

The cost would be calculated as follows and recorded in the asset account:

= List price minus (discount) plus shipping plus installation and testing

= $87,000 - $87,000*2% + $2,600 + $3,600

= $87,000 - $1,740 + $2,600 + $3,600

= $91,460

Note: The price of the machine does not include insurance costs.

Therefore, The cost of the machine is $91,460.

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