1. Rose Company sells equipment to Foster Company. The manufacturer's suggested retail price ofthe equipment is $14,475, the marked price is $13,995, and Foster purchases the equipment for$13,650. The seller also paid $240 in shipping charges on behalf of the buyer and included it on theinvoice. Using the historical-cost principle, at which amount will Foster report the equipment on itsbalance sheet?O $14,235O $14,475O $13,995O $13,890Save for LaterSubmit Answer

Historical cost principle: The historical cost principle is one of the basic principles of…

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invoice. Using the historical-cost principle, at which amount will Foster report the equipment on its balance sheet?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Rose Company sells equipment to Foster Company. The manufacturer's suggested retail price of
the equipment is $14,475, the marked price is $13,995, and Foster purchases the equipment for
$13,650. The seller also paid $240 in shipping charges on behalf of the buyer and included it on the
invoice. Using the historical-cost principle, at which amount will Foster report the equipment on its
balance sheet?
O $14,235
O $14,475
O $13,995
O $13,890
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