Reference no: EM131021319
Hamlet College recently purchased new computing equipment for its library. The following information refers to the purchase and installation of this equipment.
1. The list price of the equipment was $285,000; however, Hamlet College qualified for an "education discount" of $25,000. It paid $50,000 cash for the equipment, and issued a three-month, 9 percent note payable for the remaining balance. The note, plus accrued interest charges of $4,500 was paid promptly the note's maturity date.
2. In addition to the amount described in 1, Hamlet paid sales taxes of $15,000 at the date of purchase.
3. Freight charges for delivery of the equipment totaled $1,000.
4. Installation costs related to the equipment amounted to $5,000.
5. During installation, one of the computer terminals was accidentally damaged by a library employee. It cost the college $500 to repair this damage.
6. As soon as the computers were installed, the college paid $4,000 to print admission brochures featuring the library's new, state-of-the-art computing facilities.
QUESTION:
a. In one sentence, make a general statement summarizing the nature of expenditures that qualify for including in the cost of plant assets such as computing equipment.
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