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The Blue Moon Motel

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.