ACQUISITION COSTS. Laurel Cleaners purchased an automatic dry cleaning machine from TGF Corporation on April 1, 19x1. The machine had a list price of

$150,000. TGF typically offers cash customers a 10% discount from the list price. Laurel, however, paid $35,000 in cash and signed a 5-year, 15% note for $100,000. Laurel will pay interest on the note each year on March 31, beginning in 19x2. Laurel paid a transfer tax of 4% on the purchase price on April 30, along with transportation charges of $3,500. Laurel also paid $2,400 for the living expenses of the TGF installation crew.

During installation one of the TGF employees inadvertently damaged Laurel’s pants press. TGF paid $1,200 to repair the damage. Solvent costing $1,000 was acquired to supply the new machine, and $500 of the solvent was used to test and adjust the machine.

REQUIRED:

Compute the acquisition cost of the new dry cleaning machine. Indicate the disposition of any costs not included in the acquisition cost, and explain why each is excluded.