Anderson MEchanics Inc.purchas

timer Asked: Nov 8th, 2015

Question description

Anderson MEchanics Inc.purchased a new piece of equipment for one of the companies' repair shop. The invoice price was 64900but the salesperson gave Anderson a 7% discount for paying cash. Delivery costs amounted to 1900 and Anderson paid 350 for a special insurance policy while the equipment was in transit. The installation cost was 2000 and Anderson spent 2300 training the employees to use the new equipment. Additionally Anderson had to spend 7000 to customize the equipment to fit the shop's needs and hired a special mechanic at an annual salary of 57000 who had several years experience with this type of equipment. 1. What amounts should be capitalized for this new asset? 2. To calculate the depreciation expense for 2010 what other information do you need? 3. Do you think the company should gather the information before purchasing the asset. Why or why not?

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