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Determine the amount to be capitalized in the asset account for the purchase of the front-end loader.

Determine the amount to be capitalized in the asset account for the purchase of the front-end loader.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Ashvinbhai 

Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $119,430. The seller agreed to allow a 5.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,820. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $940. The loader operator is paid an annual salary of $10,250. The cost of the company's theft insurance policy increased by $2,300 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $6,400. Required Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs
Transcribed Image Text:Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $119,430. The seller agreed to allow a 5.00 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,820. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $940. The loader operator is paid an annual salary of $10,250. The cost of the company's theft insurance policy increased by $2,300 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $6,400. Required Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. Note: Round your answers to the nearest whole dollar. Amounts to be deducted should be indicated with minus sign. Costs that are to be capitalized: List price Total costs
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