Question

salvia company recently purchased a truck. the price negotiated with the dealer was $47,000. salvia also paid sales tax of $3,400 on the purchase, shipping and preparation costs of $4,400, and insurance for the first year of operation of $5,400. at what amount should the truck be recorded on the balance sheet prior to recording depreciation expense?

Answer 1

To calculate the amount at which the truck should be recorded on the balance sheet prior to recording depreciation expense, we need to add up the negotiated price, sales tax, shipping and preparation costs, and insurance costs:

$47,000 + $3,400 + $4,400 + $5,400 = $60,200

Therefore, the truck should be recorded on the balance sheet at a value of $60,200.