On January 2, 2020, Concord Corporation replaced its boiler with a more efficient one. The following information was available on that date: Purchase price of new boiler $140500 Carrying amount of old boiler 8500 Fair value of old boiler 3200 Installation cost of new boiler 21600 The old boiler was sold for $3200. What amount should Concord capitalize as the cost of the new boiler

The amount that Concord should capitalize as the cost of the new boiler is $162,100

Explanation:

Solution

Recall that:

The price of purchasing a new boiler = $140500

The amount of old boiler = 8500

The cost of installation of new boiler = $21600

Old boiler sold for = $3200

Now,

The Cost of New Boiler = Purchase Price of new boiler + Installation cost of new boiler

= $140500 + 21600

= $162,100