Asked by Rosemary Rubino on May 27, 2024
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On April 1, 2010, Richer Corporation purchased a new machine on a deferred payment basis.A down payment of $5, 000 was made and 10 monthly installments of $14, 000 each are to be made beginning on May 1, 2010.The cash equivalent price of the machine was $130, 000.Richer incurred and paid installation costs amounting to $6, 000.The amount to be capitalized as the cost of the machine is
A) $130, 000
B) $136, 000
C) $140, 000
D) $145, 000
Deferred Payment
A payment arrangement that allows the payer to make the payment at a future date, often after receiving the goods or services.
Capitalized
The process of recording an expenditure as an asset, rather than an expense, thus spreading the cost over its useful life.
Installation Costs
Expenses associated with setting up or installing equipment or machinery for its intended use.
- Establish and note the acquisition expenditure for property, factories, and apparatus.
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Learning Objectives
- Establish and note the acquisition expenditure for property, factories, and apparatus.
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