Denver CoAcquired a Large Rotary Forge to Be Used in Its

question 45

Essay

Denver Co.acquired a large rotary forge to be used in its manufacturing process from a competitor that was going out of business.The following costs were incurred by Denver in connection with the acquisition:
$\begin{array}{lr}\text { List price } & \$ 375,000 \\\text { Finder's fee } & 1,500 \\\text { Transportation to Denver's plant } & 13,000 \\\text { Cleaning and repainting the forge } & 1,800 \\\text { Installation costs } & 21,000 \\\text { Costs to repair a control panel damaged during installation } & 900\end{array}$
Required:
How much should Denver Co.capitalize to the machinery account?

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Definitions:

Fixed Costs

For expenses like rent, salaries, and insurance premiums, their amounts do not fluctuate with the levels of output or sales.

Variable Costs

Costs that change in proportion to the level of goods or services produced by a business.

EPS

Earnings Per Share, a financial metric that divides a company's profit by the number of its outstanding shares to indicate the company's profitability on a per-share basis.

Capital

Financial resources or assets owned by a business or individual that are useful in furthering development and generating income.