Question

Kegler Bowling installs automatic scorekeeping equipment with an invoice cost of \(190,000. The electrical work required for the installation costs \)20,000. Additional costs are \(4,000 for delivery and \)13,700 for sales tax. During the installation, a component of the equipment is carelessly left on a lane and hit by the automatic lane-cleaning machine. The cost of repairing the component is $1,850. What is the total recorded cost of the automatic scorekeeping equipment?

Short answer

The total recorded cost of the automatic scorekeeping equipment is $227,700.

Step-by-step solution

Explanation on Cost of Asset

The totalcosts incurred in purchasing of Machinery and equipment and making them ready to use is considered as total purchase cost. For example,transportation cost, taxes charged, installation cost, purchase price, etc.

Calculation of total recorded cost

$\begin{array}{c}\mathbf{\text{T}}\mathbf{otal}\mathbf{}\mathbf{cost}\mathbf{=}\mathbf{I}\mathbf{nvoice}\mathbf{}\mathbf{cost}\mathbf{+}\mathbf{I}\mathbf{nstallation}\mathbf{}\mathbf{cost}\mathbf{+}\mathbf{D}\mathbf{elivery}\mathbf{}\mathbf{cost}\mathbf{+}\mathbf{S}\mathbf{ales}\mathbf{}\mathbf{tax}\\ \mathbf{=}\mathbf{\$}\mathbf{190}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{20}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{4}\mathbf{,}\mathbf{000}\mathbf{+}\mathbf{\$}\mathbf{13}\mathbf{,}\mathbf{700}\\ \mathbf{=}\mathbf{\$}\mathbf{227}\mathbf{,}\mathbf{700}\end{array}$

Note: cost of repairing is not included because it is the result of carelessness during the installation.