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    Acquisition of Assets for Moon Co. Inc

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    Moon Co. Inc., made several purchases of long-term assets in 2009. The details of each purchase are presented here.

    New Office Equipment
    1. List price: $60,000; terms: 2/10 n/30; paid within discount period.
    2. Transportation-in: $1,600
    3. Installation: $2,200
    4. Cost to repair damage during unloading: $1,000
    5. Routine maintenance cost after six months: $300

    Basket Purchase of Copier, Computer, and Scanner for $15,000 with Fair Market Values
    1. Copier: $10,000
    2. Computer: $6,000
    3. Scanner: $4,000

    Land for New Warehouse With an Old Building Torn Down
    1. Purchase price, $200,000
    2. Demolition of building, $10,000
    3. Lumber sold from old building, $7,000
    4. Grading in preparation for new building, $14,000
    5. Construction of new building, $500,000

    In each of these cases, determine the amount of cost to be capitalized in the asset account.

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    Solution Preview

    New Office Equipment

    List price $60,000
    Less: Discount $(1,200)
    Purchase cost $58,800
    Transportation - In $1,600
    Installation $2,200
    Costs to be ...

    Solution Summary

    The solution examines acquisition of assets for Moon Co. Inc. The amount of cost to be capitalized in the asset account is determined.