Answer to Question #208270 in Accounting for cdba

Question

On January 1,2021, Judycel Co. acquired on equipment for ₱500,000 on account with term of 3/10, n/30. Additional costs incurred are as follows:

Freight and insurance ₱15,000

Cost of testing and trial runs 12,000

Proceeds from selling the samples produced during 

Testing and trial runs 2,000

Training cost of staff who will operate the equipment 13,000

 The account was paid on January 10,2021.

How much is the cost of the equipment?

Answer 1

The asset valuation technique that applies to equipment on a company's balance sheet is referred to as the cost of equipment in financial accounting. The cost of equipment would include all expenditures related to the equipment's procurement and those required to prepare it for usage by the firm.

Cost of the equipment = Freight and insurance+ Cost of testing and trial runs +Proceeds from selling the samples produced during  Testing and trial runs + Training cost of staff who will operate the equipment.

Cost of the equipment$=₱500,000+ ₱15,000+₱12,000+₱2,000+₱13,000=₱542,000$