Question

Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $370,000. Shipping costs totaled $18,000. Foundation work to house the centrifuge cost $8,700. An additional water line had to be run to the equipment at a cost of $2,100. Labor and testing costs totaled $6,300. Materials used up in testing cost $2,200. The capitalized cost is: a. $398,800. b. $388,000. c. $407,300. d. $409,200.

Answer 1

Answer:

c. $407,300

Explanation:

All the cost incurred to make the asset usable or operational will be capitalized. So All of following cost are essential to make Industrial centrifuge usable.

Industrial centrifuge cost = $370,000

Shipping costs = $18,000

Foundation work to house the centrifuge = $8,700

Additional water line to the equipment cost = $2,100

Labor and testing costs = $6,300

Materials used up in testing cost = $2,200

Total Capitalized cost =  370,000+18,000+8,700+2,100+6,300+2,200

Total Capitalized cost =  $407,100