Concept explainers
Cost of plant assets
C1
Kegler Bowling installs automatic scorekeeping equipment with an invoice cost of $190,000. The electrical work required for the installation costs $20,000. Additional costs are $4,000 for delivery and $13,700 for sales tax. During the installation, a component of the equipment is carelessly left on a lane and hit by the automatic lane-cleaning machine. The cost of repairing the component is $1,850.
What is the total recorded cost of the automatic scorekeeping equipment?
Total Recorded Cost:
Total recorded cost refers to the expenses suffered to bring the fixed asset in working state. For example, installation expenses, delivery expenses.
To compute:
Recorded cost of the equipment.
Explanation of Solution
Given,
Cost of equipment is $190,000.
Installation costs are $20,000.
Delivery costs are $4,000.
Sales tax is $13,700.
Repair cost is $ 1,850.
Formula to calculate total recorded cost,
Repair cost is revenue expenditure and therefore the cost of repair will not be included in the total cost of equipment.
Hence, total recorded cost is $227,700.
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