Big Muskie Company purchased new strip-mining equipment:

Cost: $595,000

Sales tax: $59,500

Shipping costs: $10,000

Set up costs: $15,000.

Damage to the paint on the equipment: $2,500

What is the total amount of costs that should be capitalized?

How are the Income Statement and Balance Sheet impacted if you expense Big Muskies strip-mining equipment is expensed rather than the costs capitalized?