Freight costs incurred when a long-lived asset is purchased should generally be
A)expensed in the period incurred.
B)deducted from the accumulated depreciation account.
C)added to the cost of the asset.
D)not recorded in the accounts.

Question

Quizplus · Accepted Answer

Freight costs incurred when a long-lived asset is purchased should be added to the cost of the asset. This is in accordance with the cost principle, which states that the cost of an asset includes all costs necessary to acquire and prepare the asset for its intended use, including freight costs. Adding the freight costs to the cost of the asset increases the asset's carrying amount and is consistent with generally accepted accounting principles (GAAP).

Freight Costs Incurred When a Long-Lived Asset Is Purchased Should