Which of the following best describes the proper treatment of cash discounts on acquired machinery?
A) The historical cost of the machinery should be the invoice price;the discount should be ignored.
B) The historical cost of the machinery should be the net-of-discount amount,regardless of whether the discount is actually taken.
C) The historical cost of the machinery should be the net-of-discount amount only if the discount is actually taken.
D) The historical cost of the machinery should be the invoice price plus the amount of the discount which is treated a interest capitalized on the purchase.

Question

Quizplus · Accepted Answer

The historical cost of the machinery should be the net-of-discount amount, regardless of whether the discount is actually taken. This approach ensures that the cost recorded reflects the potential savings that could have been realized, providing a more accurate representation of the asset's cost.

Which of the Following Best Describes the Proper Treatment of Cash