Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $122,380. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,200. Southwest Milling had to hire a specialist to calibrate the loader. The
Southwest Milling Co. purchased a front-end loader to move stacks of lumber. The loader had a list price of $122,380. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $2,200. Southwest Milling had to hire a specialist to calibrate the loader. The specialist’s fee was $1,190. The loader operator is paid an annual salary of $42,940. The cost of the company’s theft insurance policy increased by $2,290 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $5,500.
Determine the amount to be capitalized in the asset account for the purchase of the front-end loader. What is the discount?
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