Ballyhigh Company purchased equipment for $20,000.Sales tax on the purchase was $1,500.Other costs incurred were freight charges of $400,repairs of $350 for damage during installation,and installation costs of $450.What is the capitalizable cost of the equipment?

Question

Quizplus · Accepted Answer

Capitalizable cost of equipment = purchase price + sales tax + all necessary and reasonable costs to get the asset ready for its intended use. 
Therefore, capitalizable cost of equipment = $20,000 + $1,500 + $400 + $350 + $450 = $22,350. 
Hence, the correct answer is option C.

Ballyhigh Company Purchased Equipment for $20,000