Rizio Co. purchases a machine for $13,400, terms 2/10, n/60, FOB shipping point. The seller prepaid the $303 freight charges, adding the amount to the invoice and bringing its total to $13,703. The machine requires special steel mounting and power connections costing $926. Another $437 is paid to assemble the machine and get it into operation. In moving the machine to its steel mounting, $210 in damages occurred. Materials costing $40 are used in adjusting the machine to produce a satisfactory product. The adjustments are normal for this machine and are not the result of the damages.
|
Complete the below table to calculate the cost recorded for this machine. (Rizio pays for this machine within the cash discount period.)
|
| Less Discount: (0.02 × $13,400) = $268 | |
| Note: |
The $210 repair charge is an expense because it is not a normal and reasonable expenditure necessary to get the asset in place and ready for its intended use.
|
why didn't we add the $210 in damages into our calculation?
ReplyDeleteThe $210 repair charge is an expense because it is not a normal and reasonable expenditure necessary to get the asset in place and ready for its intended use
Delete