Sage Reclaimers entered into a contract with Pronghorn Demolition to manage the processing of recycled materials on Pronghorm various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Sage incurs selling commission costs of $2,180 to obtain the contract. Before performing the services, Sage also designs and builds receptacles and loading equipment that interfaces with Pronghorn demolition equipment at a cost of $25,100. These receptacles and equipment are retained by Sage and can be used for other projects. Pronghorn promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Sage incurs the following costs: design services for the receptacles to interface with Pronghorn equipment $3,220, loading equipment controllers $6,400, and special testing and OSHA inspection fees $2,180 (some of Pronghorn projects are on government property).

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Chapter1: Financial Statements And Business Decisions
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Sage Reclaimers entered into a contract with Pronghorn Demolition to manage the processing of recycled materials on Pronghorm
various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to
recycling centers or contractors who will reuse them. Sage incurs selling commission costs of $2,180 to obtain the contract. Before
performing the services, Sage also designs and builds receptacles and loading equipment that interfaces with Pronghorn demolition
equipment at a cost of $25,100. These receptacles and equipment are retained by Sage and can be used for other projects. Pronghorn
promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Sage incurs the following
costs: design services for the receptacles to interface with Pronghorn equipment $3,220, loading equipment controllers $6,400, and
special testing and OSHA inspection fees $2,180 (some of Pronghorn projects are on government property).
(a)
Determine the costs that should be capitalized as part of Sage Reclaimers revenue arrangement with Pronghorn Demolition. (If
answer is 0, please enter 0. Do not leave any fields blank.)
Commission Costs
%24
Design Services
%24
Cost of loading Equipment Controllers
%24
Inspection Fees
%24
Receptacles and loading Equipment
%24
Transcribed Image Text:Sage Reclaimers entered into a contract with Pronghorn Demolition to manage the processing of recycled materials on Pronghorm various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling centers or contractors who will reuse them. Sage incurs selling commission costs of $2,180 to obtain the contract. Before performing the services, Sage also designs and builds receptacles and loading equipment that interfaces with Pronghorn demolition equipment at a cost of $25,100. These receptacles and equipment are retained by Sage and can be used for other projects. Pronghorn promises to pay a fixed fee of $12,850 per year, payable every 6 months for the services under the contract. Sage incurs the following costs: design services for the receptacles to interface with Pronghorn equipment $3,220, loading equipment controllers $6,400, and special testing and OSHA inspection fees $2,180 (some of Pronghorn projects are on government property). (a) Determine the costs that should be capitalized as part of Sage Reclaimers revenue arrangement with Pronghorn Demolition. (If answer is 0, please enter 0. Do not leave any fields blank.) Commission Costs %24 Design Services %24 Cost of loading Equipment Controllers %24 Inspection Fees %24 Receptacles and loading Equipment %24
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