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Exercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,000. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,010. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,180. The loader operator is paid an annual salary of $10,300. The cost of the company's theft insurance policy increased by $1,980 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $7,200. Required: Determine the amount to be capitalized in an 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 Less: Discount $ 124,000 Total costs $ 124,000

Exercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,000. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,010. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,180. The loader operator is paid an annual salary of $10,300. The cost of the company's theft insurance policy increased by $1,980 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $7,200. Required: Determine the amount to be capitalized in an 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 Less: Discount $ 124,000 Total costs $ 124,000

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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Exercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,000. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,010. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,180. The loader operator is paid an annual salary of $10,300. The cost of the company's theft insurance policy increased by $1,980 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $7,200. Required: Determine the amount to be capitalized in an 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 Less: Discount $ 124,000 Total costs $ 124,000
Transcribed Image Text:Exercise 8-4A (Algo) Determining the cost of an asset LO 8-1 Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $124,000. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,010. Southwest Milling had to hire a specialist to calibrate the loader. The specialist's fee was $1,180. The loader operator is paid an annual salary of $10,300. The cost of the company's theft insurance policy increased by $1,980 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $7,200. Required: Determine the amount to be capitalized in an 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 Less: Discount $ 124,000 Total costs $ 124,000
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