On January 1, 2017, Becker Interior Design acquired machinery for $500,000. Various other costs relating to the acquisition and installation of the machine including transportation, electrical wiring, special base, and so on amount to $9,500. The machine has an estimated life of 20 years, with no salvage value at the end of that period. Becker borrowed $500,000 on January 1, 2017 to finance the purchase of the machinery. The loan is payable on April 1, 2022 plus interest at the rate of 10%. The owner of the business suggests that the incidental costs of $9,500 be charged to expense immediately for the following reasons:

If the machine should be sold, these costs cannot be recovered in the sales price.

The inclusion of the $9,500 in the machinery account on the books will not necessarily result in a closer approximation of the market price of this asset over the years.

Charging the $9,500 to expense immediately will reduce federal income taxes.

Respond to the following prompts:

At what amount should Becker record the acquisition cost of the machine?

Should any of the interest be capitalized and if so, what amount of capitalized interest should Becker include in the cost of the machine? Provide support for your response.

Evaluate the owners reasons and share your thoughts on whether or not you agree. Be sure to discuss any ethical implications.