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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education