WXC incurred the following costs during 2015 to purchase LXT shares: (a) 1,000 shares of LXT at $6 per share: $$\begin{array} { | l | r | }
\hline \text { January } 1 \text { payment } & \$ 2,000 \
\hline \text { March } 1 \text { payment } & 1,000 \
\hline \text { May } 1 \text { payment } & 1,000 \
\hline \text { July } 1 \text { payment } & 1,000 \
\hline \text { september } 1 \text { payment } & 1,000 \
\hline \text { (b) inerest paid } &400 \
\hline \text { (c) Brokerage fee paid } &800 \
\hline \text { (d) excise tax paid } &300 \
\hline
\end{array}$$ Assuming the cost method is used, WXC should record this 2015 investment at:

Question

WXC incurred the following costs during 2015 to purchase LXT shares: (a) 1,000 shares of LXT at $6 per share: $$\begin{array} { | l | r | } 
\hline \text { January } 1 \text { payment } & \$ 2,000 \
\hline \text { March } 1 \text { payment } & 1,000 \
\hline \text { May } 1 \text { payment } & 1,000 \
\hline \text { July } 1 \text { payment } & 1,000 \
\hline \text { september } 1 \text { payment } & 1,000 \
\hline \text { (b) inerest paid } &400 \
\hline \text { (c) Brokerage fee paid } &800 \
\hline \text { (d) excise tax paid } &300 \
\hline
\end{array}$$ Assuming the cost method is used, WXC should record this 2015 investment at:

Quizplus · Accepted Answer

The cost of the investment includes the purchase price of the shares and any directly attributable costs. The shares cost $6,000 (1,000 shares x $6), and the brokerage fee of $800 is directly attributable. Therefore, the total cost is $6,800. However, the interest and excise tax are not included in the cost of the investment.

WXC Incurred the Following Costs During 2015 to Purchase LXT