A New Machine with a Purchase Price of $109,000, with Transportation

question 74

Multiple Choice

A new machine with a purchase price of $109,000, with transportation costs of $12,000, installation costs of $5,000, and special acquisition fees of $6,000, would have a cost basis of

• A) $114,000
• B) $126,000
• C) $121,000
• D) $132,000

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Definitions:

Return on Assets

A financial ratio indicating the profitability of a company relative to its total assets.

Costs of Goods Sold

Costs directly related to the manufacture of products sold by a company.

Accounts Receivable

Outstanding payments from debtors to a company for goods or services already utilized or delivered but not paid for.

Market-to-Book Ratio

A ratio used to compare a company's current market value to its book value, indicating how highly valued a company is in comparison to its actual assets.