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15 May, 21:18

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?

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  1. 15 May, 22:44
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    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.
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