Woowee Company manufactures electric motorcycles.On April 1,it purchased a machine for its assembly line at a contract price of $300,000 with terms of 2/10,n/30.Woowee paid the contract price on April 8 and also incurred installation and transportation costs of $5,000,sales tax of $18,000,and testing costs of $4,000.During testing,the machine was accidentally damaged,so the company had to pay $2,000 to repair it.
Required:
(a)What characteristics are necessary for a company to include an asset in the category of property,plant,and equipment?
(b)What is the capitalizable cost of the machine?

Question

Quizplus · Accepted Answer

The Answer of Woowee Company manufactures electric motorcycles.On April 1,it purchased a machine for its assembly line at a contract price of $300,000 with terms of 2/10,n/30.Woowee paid the contract price on April 8 and also incurred installation and transportation costs of $5,000,sales tax of $18,000,and testing costs of $4,000.During testing,the machine was accidentally damaged,so the company had to pay $2,000 to repair it.
Required:
(a)What characteristics are necessary for a company to include an asset in the category of property,plant,and equipment?
(b)What is the capitalizable cost of the machine?

Woowee Company Manufactures Electric Motorcycles