southwest milling company purchased a front - end loader to move stacks of lumber. the loader had a list…

southwest milling company purchased a front - end loader to move stacks of lumber. the loader had a list price of $119,980. the seller agreed to allow a 5.25 percent discount because southwest milling paid cash. delivery terms were fob shipping point. freight cost amounted to $2,880. 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 $17,280. the cost of the companys theft insurance policy increased by $1,520 per year as a result of acquiring the loader. the loader had a four - year useful life and an expected salvage value of $6,000. required determine the amount to be capitalized in the asset account for the purchase of the front - end loader. note: round your answers to the nearest whole dollar. amounts to be deducted should be indicated with minus sign. costs that are to be capitalized: list price total costs

southwest milling company purchased a front - end loader to move stacks of lumber. the loader had a list price of $119,980. the seller agreed to allow a 5.25 percent discount because southwest milling paid cash. delivery terms were fob shipping point. freight cost amounted to $2,880. 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 $17,280. the cost of the companys theft insurance policy increased by $1,520 per year as a result of acquiring the loader. the loader had a four - year useful life and an expected salvage value of $6,000. required determine the amount to be capitalized in the asset account for the purchase of the front - end loader. note: round your answers to the nearest whole dollar. amounts to be deducted should be indicated with minus sign. costs that are to be capitalized: list price total costs

Answer

Explanation:

Step1: Calculate the discounted price

The discount amount is $119980\times0.0525 = 6298.95$. The discounted price is $119980 - 6298.95=113681.05$.

Step2: Add freight cost

The cost after adding freight is $113681.05 + 2880=116561.05$.

Step3: Add calibration fee

The cost after adding calibration fee is $116561.05+ 1170 = 117731.05$.

Step4: Exclude non - capitalizable costs

The loader operator's salary and the increase in theft - insurance policy are operating costs and not capitalizable.

Answer:

$117731$