Dorman Company Purchased a New Web Server on January 1

question 59

Essay

Dorman Company purchased a new web server on January 1. The following information and expenditures related to this acquisition were made:
$\begin{array}{lr}\text { List price } & \$ 5,000 \\\text { Cash price paid } & 4,200 \\\text { Transportation-in } & 300 \\\text { Insurance during transport } & 100 \\\text { Interest paid for the current year related to financing the web server } & 240 \\\text { Installation cost } & 200 \\\text { One-year maintenance contract } & 400 \\\text { Disk drive installed into the web server } & 1,000\end{array}$
Specify and justify which of the preceding expenditures should be added to the cost of the web server and disclose that cost. Indicate how the expenditures excluded from the cost of the web server would be classified.