Which of the Following Would Not Be Considered Part of the Cost

question 103

Multiple Choice

Which of the following would not be considered part of the cost of equipment recently purchased?

• A) Sales tax.
• B) Transportation charges.
• C) Installation and setup charges.
• D) All three are capitalized costs.

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Definitions:

Lower-of-Cost-or-Market-Value

An accounting principle requiring that inventory be recorded at the lower of either its historical cost or its current market value.

Book Value

The value of an asset as reported on a company's balance sheet, calculated as the cost of the asset minus any accumulated depreciation.

Impairment Model

Impairment Model is an accounting method that requires assets to be reviewed for impairment, whereby their carrying value is adjusted to reflect their recoverable amount if this is less than their current book value.

Indefinite-Lived Assets

Non-physical assets without a predefined expiry date in terms of economic benefits or usefulness.