C is corrent. Young should capitalize all costs to place the asset in its intended and useful state. The fair value of the equipment is calculated by adding the down payment to the present value of the note payable. The fair value of the equipment is $4,000 + (2.58 × $6,000) = $19,480. The shipping charges and installation charges should also be capitalized. Therefore, the total capitalized cost of the equipment is $24,980 ($19,480 + $2,000 + $3,500).
A is incorrect. Young should capitalize all costs to place the asset in its intended and useful state. The fair value of the equipment is calculated by adding the down payment to the present value of the note payable. The fair value of the equipment is $4,000 + (2.58 × $6,000) = $19,480. The shipping charges and installation charges should also be capitalized. Therefore, the total capitalized cost of the equipment is $24,980 ($19,480 + $2,000 + $3,500).
A is incorrect. Young should capitalize all costs to place the asset in its intended and useful state. The fair value of the equipment is calculated by adding the down payment to the present value of the note payable. The fair value of the equipment is $4,000 + (2.58 × $6,000) = $19,480. The shipping charges and installation charges should also be capitalized. Therefore, the total capitalized cost of the equipment is $24,980 ($19,480 + $2,000 + $3,500).
D is incorrect. Young should capitalize all costs to place the asset in its intended and useful state. The fair value of the equipment is calculated by adding the down payment to the present value of the note payable. The fair value of the equipment is $4,000 + (2.58 × $6,000) = $19,480. The shipping charges and installation charges should also be capitalized. Therefore, the total capitalized cost of the equipment is $24,980 ($19,480 + $2,000 + $3,500).
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