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28 January, 08:27

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

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  1. 28 January, 12:23
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    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
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