Assume That Trader Pete's, an Organic Food Retailer in the United

question 120

Multiple Choice

Assume that Trader Pete's, an organic food retailer in the United States, recently purchased a new refrigeration system for its Washington, DC, store.Trader Pete's paid $1.3 million for the refrigeration unit and paid an additional $120,000 to modify the unit to meet its specific needs.Trader Pete's paid $55,000 for the transportation and installation of the unit, plus $48,000 for an annual insurance premium for the first year, which begins next month.Finally, assume that Trader Pete's hired a refrigeration technician, who is charged with the maintenance of the unit; that technician's annual salary is $80,000.How much should Trader Pete's record as the acquisition cost of the refrigeration unit?

• A)$1,300,000
• B)$1,420,000
• C)$1,475,000
• D)$1,523,000
• E)$1,603,000

---

Definitions:

Income Tax Rate

The portion of one's income that is handed over to the state as taxation.

Straight-Line Depreciation

A manner for allocating the expense of a material asset across its functional life in even yearly figures.

Renovation Cost

Expenses associated with upgrading or restoring the structure, functionality, or appearance of a property.

Initial Investments

Initial investments are the upfront sums spent to start a project, purchase assets, or establish a business.