Worf Co. both purchases and constructs various equipment it uses in its operations. The following items for
Question:
Worf Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2025.
Instructions
Compute the total cost for each of these two pieces of equipment. If an item is not capitalized as a cost of the equipment, indicate how it should be reported.
Transcribed Image Text:
Purchase Cash paid for equipment, including sales tax of $5,000 Freight and insurance cost while in transit Cost of moving equipment into place at factory Wage cost for technicians to test equipment Insurance premium paid during first year of operation on this equipment Special plumbing fixtures required for new equipment Repair cost incurred in first year of operations related to this equipment Construction Material and purchased parts (gross cost $200,000; failed to take 2% cash discount) Imputed interest on funds obtained from stock financing used during construction Labor costs Allocated overhead costs (fixed-$20,000; variable-$30,000) Profit on self-construction Cost of installing equipment $105,000 2,000 3,100 4,000 1,500 8,000 1,300 $200,000 14,000 190,000 50,000 30,000 4,400
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Related Book For
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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