Question

Somerset Company acquired a piece of equipment with a list price of $200,000 for $150,000. Freight to Somerset's location was $7,000. Installation and testing costs were $10,500. An old piece of equipment was scrapped as a result of this new purchase. The old piece of equipment had an undepreciated value (net book value) of $8,000. The new piece of equipment is expected to have a 10 year life and a salvage value of $15,000. What is the total value assigned to the new piece of equipment?

Answer 1

Answer:

The euqipment value is 167,500 dollars

Explanation:

The equipment will enter the accounting as the sum of all the cost needed to leave the equipmenbt ready to be use.

Thus, it will include:

purchase cost of 150,000

freight-in for            7,000

Installation cost    10,500

Total cost:           167,500

The old piece of equioment cost and disposal are nto related to this new equipment, so we ignore this data.