Costs of Acquiring Fixed Assets

Melinda Stoffers owns and operates ABC Print Co. During February, ABC Print Co. incurred the following costs (1-12 below) in acquiring two printing presses. One printing press was new, and the other was bought from a business that recently filed for bankruptcy.

a. Indicate which costs incurred in acquiring the new printing press (1-6 below) should be debited to the asset account.

Item

Debited to asset account

1.

Fee paid to factory representative for installation

Yes or No

2.

Freight

Yes or No

3.

Insurance while in transit

Yes or No

4.

New parts to replace those damaged in unloading

Yes or No

5.

Sales tax on purchase price

Yes or No

6. Special foundation Yes or No

b. Indicate which costs incurred in acquiring the used printing press (7-12 below) should be debited to the asset account.

	Item	Debited to asset account
7.	Fees paid to attorney to review purchase agreement	Yes or No
8.	Freight	Yes or No
9.	Installation	Yes or No
10.	Repair of damage incurred in reconditioning the press	Yes or No
11.	Replacement of worn-out parts	Yes or No
12.	Vandalism repairs during installation	Yes or No