Question

Bad Brads BBQ purchased a piece of equipment by paying $5,000 cash. They also incurred a shipping cost of $400 to get the equipment to its factory. The fair value of this equipment is $7,000. For what amount should Bad Brads BBQ reoord the equipment? A. $5,000. B. $5,400 C. $7,000 D. $7,400.

Answer 1

option (B) $5,400

Step-by-step explanation:

Data provided in the question:

Amount paid for the equipment = $5000

Shipping cost = $400

The fair value of this equipment = $7,000

Now,

The Brads BBQ should record the amount of equipment as

= Amount paid for the equipment + Shipping cost

or

= $5,000 + $400

or

Brads BBQ record the equipment = $5,400

Hence,

The correct answer is option (B) $5,400