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Woodward Company purchased a new piece of equipment to use in its business. The details of the purchase and related costs are as follows: 1. Purchase price of equipment $70,000 2. Installation of equipment $6,000 3. Freight costs (FOB shipping point) $1,000 4. Annual salary of new employee hired to operate the equipment $20,000 5. Increase in the annual cost of the fire and theft insurance policy to cover the new equipment $500 Determine the amount to be capitalized for this equipment.

Woodward Company purchased a new piece of equipment to use in its business. The details of the purchase and related costs are as follows: 1. Purchase price of equipment $70,000 2. Installation of equipment $6,000 3. Freight costs (FOB shipping point) $1,000 4. Annual salary of new employee hired to operate the equipment $20,000 5. Increase in the annual cost of the fire and theft insurance policy to cover the new equipment $500 Determine the amount to be capitalized for this equipment.

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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Woodward Company purchased a new piece of equipment to use in its business. The details of the purchase and related costs are as follows: 1. Purchase price of equipment $70,000 2. Installation of equipment $6,000 3. Freight costs (FOB shipping point) $1,000 4. Annual salary of new employee hired to operate the equipment $20,000 5. Increase in the annual cost of the fire and theft insurance policy to cover the new equipment $500 Determine the amount to be capitalized for this equipment.
Transcribed Image Text:Woodward Company purchased a new piece of equipment to use in its business. The details of the purchase and related costs are as follows: 1. Purchase price of equipment $70,000 2. Installation of equipment $6,000 3. Freight costs (FOB shipping point) $1,000 4. Annual salary of new employee hired to operate the equipment $20,000 5. Increase in the annual cost of the fire and theft insurance policy to cover the new equipment $500 Determine the amount to be capitalized for this equipment.
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