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Yocum Company purchased equipment on January 1 at a list price of $1

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Yocum Company purchased equipment on January 1 at a
list price of $120,000, with credit terms 2/10, n/30.
Payment was made within the discount period and Yocum
was given a $2,400 cash discount. Yocum paid $6,000
sales tax on the equipment, and paid installation charges
of $1,760. Prior to installation, Yocum paid $4,000 to pour
a concrete slab on which to place the equipment. What is
the total cost of the new equipment?
$125,360
$123,600
$129,360
$131,760
$125,360
Solution
Cost of assets includes all cost incurred directly or
indirectly for acquisition of the assets.
It also includes any cost incurred for readying the assets
for its intended use.
The cost which comprise cost of assets includes
Net Purchase Price (After Discount)
Taxes/ Duty
Installation Charges

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Any other charges incurred specifically to make asset
ready to use.
So Cost of equipment will arrived as under
List Price of Equipment
120000
Less: Discounts Received
2400
Add: Sales Tax
6000
Add: Installation Charges
1760
Add: Concrete Structure for Equipment
4000
Total Cost of Equipment ($)
129360
List Price of Equipment
120000
Less: Discounts Received
2400
Add: Sales Tax
6000
Add: Installation Charges
1760
Add: Concrete Structure for Equipment
4000

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Yocum Company purchased equipment on January 1 at a list price of $120,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $2,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and paid installation charges of $1,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment? $125,360 $123,600 $129,360 $131,760 $125,360 Solution Cost of assets includes all cost incurred directly or indirectly for acquisition of the assets. It also includes any cost incurred for readying the assets for its intended use. The cost which comprise cost of assets includes Net Purchase Price (After Discount) Taxes/ Duty Installation Charges Any other charges incurred specifically to make asset ready to use. So Cost of equipment will arrived as under List Price o ...
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