On January 1, 2014, Chicago Furniture purchases a new delivery truck. The company pays $60,000 for the truck, sales taxes of $3,400, and delivery costs of $1,700. Chicago Furniture pays a local vendor $3,600 to paint the company's name and logo on the side of the truck. The company also pays $12,000 for an annual insurance policy and $1,300 for a motor vehicle license. At what amount will Chicago Furniture record the truck on its statement of financial position at January1, 2014?

Question

Quizplus · Accepted Answer

Chicago Furniture will record the truck at its cost, which includes the purchase price ($60,000), sales taxes ($3,400), and delivery costs ($1,700): $60,000 + $3,400 + $1,700 = $65,100. 
In addition, the cost of painting the company's name and logo on the truck ($3,600), annual insurance policy ($12,000), and motor vehicle license ($1,300) are considered incidental expenses and will be included in the cost of the truck. 
Therefore, the total cost of the truck to be recorded on the statement of financial position is: $65,100 + $3,600 + $12,000 + $1,300 = $82,000.

On January 1, 2014, Chicago Furniture Purchases a New Delivery