Initial Cost of Long Lived Assets Video Lessons

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Problem: Stockton Corporation purchased equipment for $30,000. Stockton also paid $400 for freight and insurance while in the equipment was in transit. Sales tax amounted to $240. Insurance, taxes, and maintenance costs incurred after the equipment was placed in service were $1,000. How much should Stockton Corporation capitalize as the cost of the equipment? a. $30,000 b. $30,400 c. $30,640 d. $31,000 e. $31,640

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Stockton Corporation purchased equipment for $30,000. Stockton also paid $400 for freight and insurance while in the equipment was in transit. Sales tax amounted to $240. Insurance, taxes, and maintenance costs incurred after the equipment was placed in service were $1,000. How much should Stockton Corporation capitalize as the cost of the equipment?

a. $30,000

b. $30,400

c. $30,640

d. $31,000

e. $31,640

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