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Alicia Said:

Accounting question ?

We Answered:

You paid within the discount period so the base amount is:

$60,000 X 98% = $58,800

To that you add the:

Freight Costs $1,000
Pollution Control $2,500
Architect Fees $6,000

That gives you an acquisition cost of $68,300.

The damage and repair costs during installation is not really related to the acquisition and should be expensed as a period cost.

Also expensed as period costs are the liability insurance (which should have paid for the damages incurred during installation) and the interest costs.

Janice Said:

Accounting Help - Acquisition Cost Help?

We Answered:

I believe that the the following costs would be included in the acquisition cos

equipment with a list price of $72,000
Freight costs of $1,500
Pollution-control device cost of $4,400.
Architect's fees of $6,100 were paid to redesign the work space to accommodate the new equipment.
Interest of $4,500 to refinance

Total $88,500.00