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

To determine the cost of the equipment, we need to add the purchase price, freight and insurance, and sales tax:
$46,000 + $1,200 + $850 = $48,050
We also need to add the insurance, taxes, and maintenance for the first year of use to this cost:
$48,050 + $1,000 = $49,050
Therefore, choice C is correct.

Morton Corporation Purchased Equipment for $46,000