On January 1, 2011, Chicago Furniture purchases a new delivery truck.The company pays $65,000 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 a t January1, 2011?

Question

Quizplus · Accepted Answer

The truck should be recorded at its cost, which includes the purchase price, sales taxes, delivery costs, and costs to prepare the asset for use. Therefore, the recorded amount is $65,000 + $3,400 + $1,700 + $3,600 = $73,700. The insurance and license costs are not included in the capitalized cost of the truck.

On January 1, 2011, Chicago Furniture Purchases a New Delivery