Morton Corporation purchased equipment for $46,000. Morton also paid $1,200 for freight and insurance while the equipment was in transit. Sales tax amounted to $850. Insurance, taxes and maintenance for the first year of use was $1,000. How much should Morton Corporation capitalize as the cost of the equipment?

Question

Quizplus · Accepted Answer

Morton should capitalize the purchase price ($46,000), freight and insurance in transit ($1,200), and sales tax ($850), totaling $48,050. The first-year insurance, taxes, and maintenance are not capitalized.

Morton Corporation Purchased Equipment for $46,000