Determining Asset Cost Welborne Corporation incurred the following costs of opening a new production area in its main factory building:

a. Compute the amount that should be included as equipment cost.

b. What treatment should be accorded those costs not included in the equipment cost?

c. How should depreciation on the equipment be reported in Welborne’s income statement?

d. If Welborne had borrowed money to pay for the equipment, how should the interest on the amount borrowed be reported?

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May 7 10 June 15 20 29 30 22827 9 Paid $120,000 for removal of old structures to accommodate new production area. Paid $220,000 for restructuring and finishing new production area. Paid $80,000 for cement foundation for placement of new machinery. Received new production equipment with an invoice price of $450,000. A business discount of 10 percent was applied to the gross purchase price. Paid freight on equipment of $35,000. Paid invoice for equipment. Cost of installing equipment was $14.000. Paid president's salary of $10,000 for June. Received refund of $8,000 on cement work for equipment foundation. Paid excise taxes on equipment of $19,000.