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    The Blue Moon Motel

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    The invoice includes the price of the computer, the sales tax, and maintenance.

    Invoice price of equipment-------------------------------------- $10000
    Sales tax on purchase(4% as shown on invoice)--------------- 400
    Terms of sale-------------------------------------------------- 2/10, n/30
    (Assume the invoice will be paid within the discount period.)
    Freight-in paid---------------------------------------------------- 300
    Speeding ticket given to our truck driver
    While delivering equipment----------------------------------- 25
    Installation costs------------------------------------------------- 150
    Maintenance contract - 2 years--------------------------------- 2000

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    All costs incurred in acquiring an asset and preparing the asset for productive use are capitalized as the cost of the asset by debiting them to the asset account. The costs include the net ...

    Solution Summary

    This solution is comprised of a detailed explanation to determine the proper amount to be capitalized in the asset account equipment.