On January 1, 2019, BigBen Purchased a Machine, Incurring the Expenditures

question 113

Multiple Choice

On January 1, 2019, BigBen purchased a machine, incurring the expenditures listed below. The machine had an estimated useful life of 10 years, and BigBen uses straight-line depreciation for its equipment. $$\begin{array} { | l | r | } \hline \text { Invoice cost of machine } & \$ 100,000 \\\hline \text { Shipping costs paid } & 15,000 \\\hline \text { Preparing concrete platform to support machine } & 10,000 \\\hline \text { Testing of machine prior to general use } & 30,000 \\\hline\end{array}$$ What amount should be capitalized as the cost of the machinery for 2019?

• A)$100,000
• B)$110,000
• C)$115,000
• D)$155,000

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Definitions:

Guidelines

General rules, principles, or pieces of advice that suggest how something should be done or what something should be.

Account Category

The classification of accounts into different types, such as assets, liabilities, equity, revenue, and expenses, to organize financial information effectively.

Assets

Economic resources or valuable items owned by a business, capable of being converted into cash or used in generating revenue.

Liabilities

Financial obligations a company owes to outside parties, such as loans or accounts payable.