A company purchased equipment on account for $25,000. They paid within the discount period and saved 1% of the purchase cost. In addition, the company paid $1,500 to have the equipment delivered and $500 to have it installed. In setting up the machine, the maintenance assistant caused
$300 in damages which was repaired before the machine was put into service. The cost of this asset for financial accounting purposes is:

Question

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The cost of the asset includes the purchase price minus any discounts, plus any costs necessary to get the asset ready for use. The purchase price is $25,000 minus a 1% discount ($250), plus delivery costs of $1,500, installation costs of $500, and repair costs of $300, totaling $26,750.

A Company Purchased Equipment on Account for $25,000