A construction company purchased a piece of equipment with a price of $100,000 on March 1, Year 1. The amounts are related to the equipment purchase. Match the items and explain how each item should be accounted for. (Choices may be used more than once.)
-Freight costs of $3,000 were paid to ship the equipment from the manufacturer.

Question

Quizplus · Accepted Answer

Freight costs of $3,000 paid to ship the equipment from the manufacturer should be included as part of the cost of the equipment. This is because such costs are necessary to bring the asset to its intended use and location, and therefore, are capitalized as part of the asset's cost on the balance sheet.

A Construction Company Purchased a Piece of Equipment with a Price