A company purchased new machinery and incurred freight, assembly, and installation costs in addition to the invoice cost of the machinery. These additional costs should be debited to:

Question

Quizplus · Accepted Answer

The cost of machinery for accounting purposes includes the purchase price plus all expenditures necessary to bring the asset to its intended use, including freight, assembly, and installation costs. These costs are capitalized as part of the machinery asset on the balance sheet, not expensed.

A Company Purchased New Machinery and Incurred Freight, Assembly, and Installation