A company purchased new machinery and incurred freight,assembly,and installation costs in addition to the invoice cost of the machinery.These additional costs should be debited to:

Question

Quizplus · Accepted Answer

The additional costs of freight, assembly, and installation directly increase the value of the machinery and are necessary to prepare the asset for its intended use. Therefore, they should be capitalized as part of the machinery's cost on the balance sheet, not expensed. This is why they are debited to the Machinery account.

A Company Purchased New Machinery and Incurred Freight,assembly,and Installation Costs