DD Company paid 20500 to acquire a 100 ton press Freight cha

D&D Company paid $20,500 to acquire a 100 ton press. Freight charges to deliver the equipment amounted to $1,700 and were paid by S&D. Installation costs amounted to $870, and machine testing charges amounted to $450.

What amount should be capitalized to the Equipment account?

Choose one:

A. $23,520

B. $20,500

C. $22,500

D. $12,500

Solution

Solution:

Amount to be capitalized to the Equipment Account = Purchase Price + Freight Charges + Installation cost + Testing Charges

= $20500 + $1700 + $870 + $450 = $23,520

Hence, option \"A\" is correct.