A machine was built for $125,500 during July; the cost included $750 in interest expense. The company had to pay $4,000 for shipping and another $2,000 for insuring the parts. Following ASPE, the capitalized cost of the equipment was
A) $124,750.
B) $125,500.
C) $131,500.
D) $132,250.

Question

Quizplus · Accepted Answer

The capitalized cost includes the purchase price minus interest, plus shipping and insurance: $125,500 - $750 + $4,000 + $2,000 = $131,500.

A Machine Was Built for $125,500 During July; the Cost