Cost of Equipment Example UPS purchased package sorting equipment to be used in its Nashville, TN hub. The purchase price was $684,000 plus $42,000 sales tax. UPS also paid $15,000 for an annual maintenance contract for the vendor to provide routine maintenance services on the equipment. UPS paid a freight company $10,000 to transport the equipment to its Nashville hub location plus $1,500 to insure the equipment in transit. The sorting equipment required several concrete support platforms and special electrical equipment to be constructed inside the hub building to support the equipment and its operation. These costs amounted to $250,000. UPS also paid the vendor to install the equipment at a cost of $75,000. After installation, several trial runs were made to ensure proper operation. The cost of these trials including wasted materials was $2,600. What amount should be capitalized in connection with the new equipment? School of ACCOUNTANCY 2