Question

On October 1, 20X4, Shaw Corp. purchased a machine for $126,000 that was placed in service on November 30, 20X4. Shaw incurred additional costs for this machine, as follows: Shipping $ 3,000 Installation 4,000 Testing 5,000 In Shaw's December 31, 20X4 Balance Sheet, the machine's cost should be reported as:

Answer 1

Answer:

$138,000

Explanation:

The computation of the machine cost that would be reported is shown below:

= Purchase value of machine + shipping cost + installation cost + testing cost

= $126,000 + $3,000 + $4,000 + $5,000

= $138,000

At the time of reporting the machine cost, we have to consider all the cost that is related to the machine. Therefore, all the given cost is considered.