Cullumber Company purchased machinery on January 1 at a list price of $320000, with credit terms 4/10, n/30. Payment was made within the discount period. Cullumber paid $21750 sales tax on the machinery and paid installation charges of $5900. Prior to installation, Cullumber paid $11200 to pour a concrete slab on which to place the machinery. What is the total cost of the new machinery

the total cost of the new machinery is $302,550

Explanation:

Cost of a Property Plant and Equipment (PPE) item includes Purchase price of asset and other costs directly incurred in bringing the asset in the location and condition required by management for operation excluding taxes that can be claimed.

Thus the Cost of this Machinery Can be Calculated as :

List Price                                     $320,000

Less Cash Discount at 4%           ($12,800)

Purchase Price                           $307,200

Less Sales Tax                             ($21,750)

                                                    $285,450

Add installation charges                $5,900

Add Cost of concrete slab            $11,200

Total Cost of Machinery            $302,550

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