Question
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $118,740. The seller agreed to allow
Southwest Milling Company purchased a front-end loader to move stacks of lumber. The loader had a list price of $118,740. The seller agreed to allow a 4.25 percent discount because Southwest Milling paid cash. Delivery terms were FOB shipping point. Transportation cost amounted to $2,390. Southwest Milling had to hire a specialist to calibrate the loader. The specialists fee was $1,170. The loader operator is paid an annual salary of $44,100. The cost of the companys theft insurance policy increased by $2,480 per year as a result of acquiring the loader. The loader had a four-year useful life and an expected salvage value of $5,700.
| Costs that are to be Capitalized | |
| List price | |
| Less: Discount | |
| Transportation cost | |
| Specialist fee | |
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