The Miami Company is deciding whether to purchase a new piece of equipment. The equipment costs $1,000,000 and the fee to transport and install the equipment is $20,000. We also expect to spend $50, 000 training our staff on the new equipment. Assume that this type of equipment is depreciated with straight - line depreciation over 5 years. How would we recognize the expenses associated with this investment on the income statement and balance sheet? A: $254 000 in exoenses and $1.020.000 capitalized on the balance sheet B: $270 000 in exoenses and $ 1:000.000 capitalized on the balance sheet C: $1.070.000 in expenses, nothing on the balance sheet D: $70.000 in expenses and $1.000.000 capitalized on the balance sheet
The Miami Company is deciding whether to purchase a new piece of equipment. The equipment costs $1,000,000 and the fee to transport and install the equipment is $20,000. We also expect to spend $50, 000 training our staff on the new equipment. Assume that this type of equipment is depreciated with straight - line depreciation over 5 years. How would we recognize the expenses associated with this investment on the income statement and balance sheet? A: $254 000 in exoenses and $1.020.000 capitalized on the balance sheet B: $270 000 in exoenses and $ 1:000.000 capitalized on the balance sheet C: $1.070.000 in expenses, nothing on the balance sheet D: $70.000 in expenses and $1.000.000 capitalized on the balance sheet
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Miami Company is deciding whether to purchase a new piece of equipment. The
equipment costs $1,000,000 and the fee to transport and install the equipment is $20,000.
We also expect to spend $50, 000 training our staff on the new equipment. Assume that this
type of equipment is depreciated with straight-line depreciation over 5 years. How would we
recognize the expenses associated with this investment on the income statement and balance
sheet? A: $254 000 in expenses and $1.020.000 capitalized on the balance sheet B: $270 000
in exoenses and $ 1:000.000 capitalized on the balance sheet C: $1.070.000 in expenses,
nothing on the balance sheet D: $70.000 in expenses and $1.000.000 capitalized on the
balance sheet
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