Boone Company purchased a piece of machinery by paying $5,000 cash. In addition to the purchase price, the company incurred $100 freight charges. The machine has an estimated useful life of 5 years and will require $125 for insurance over that period. Boone Company would record the cost of the machine at

Question

Quizplus · Accepted Answer

The cost of the machine includes the purchase price and any costs necessary to bring it to its intended use, such as freight charges. Therefore, the cost is $5,000 + $100 = $5,100. Insurance is not included in the cost of the machine.

Boone Company Purchased a Piece of Machinery by Paying $5,000