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    Capitalizing costs

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    Hi there,
    Can you please help me with the following question. I don't understand capitalizing costs. I don't know which costs can be capitalized and which have to be expensed.

    Grab Manufacturing Co. purchased a ten-ton draw press at a cost of $18,000 with terms 5/15 n/45. Paymnt was made within the discount period. Shipping costs were $4600 which included $200 for insurance in transit. Installation costs totaled $12000 which included $4000 for taking out a section of a wall and rebuilding it because the press was too large for the doorway. The capitalized cost of the ten-ton draw press is:

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    Solution Preview

    A capital expenditure is an expenditure to acquire a long-term asset -- one that results in depreciation over the life of that asset.
    Capital expenditures include the ...

    Solution Summary

    This explains the steps to compute the capitalizing costs