Dougherty Corporation purchased a new delivery van for use in its dry-cleaning business. As part of the purchase of the van the following costs were incurred:

Acquisition cost 30,000, Sales tax 1,800, Title transfer 250, paid to the company logo on the van 1,200, and two-year service contract 1,600.

Which of these costs would not be included in the capitalized cost of the asset?

Question

Business

Emilee Woods

19 May, 10:52

Dougherty Corporation purchased a new delivery van for use in its dry-cleaning business. As part of the purchase of the van the following costs were incurred:

Acquisition cost 30,000, Sales tax 1,800, Title transfer 250, paid to the company logo on the van 1,200, and two-year service contract 1,600.

Which of these costs would not be included in the capitalized cost of the asset?

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Answers (1)

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Tiana · Answer 1

Company logo cost and the two year service contract

Explanation:

The capitalized cost of the asset includes those costs that is shown on the asset side of the balance sheet.

In the given scenario, the capitalized cost includes acquisition cost, sales cost, and the title transfer fee

But the cost that is not capitalized and is not reflected on the balance sheet is a company logo on the van and the two-year service contract