D is corrent because all costs necessary to place an asset in its intended and useful state should be capitalized. Therefore, Talton should include the cost of the equipment ($185,000), the rearrangement of the assembly line ($12,000) and the removal of the wall ($3,000) as costs to place the equipment into service. Therefore, this answer is correct because the total cost capitalized is equal to $200,000 ($185,000 + $12,000 + $3,000).
A is incorrect because it ignores the rearrangement cost and capitalizes only the equipment cost of $185,000 and the wall removal cost of $3,000 ($185,000 + $3,000 = $188,000)
B is incorrect because it ignores the rearrangement and wall removal costs and capitalizes only the equipment cost of $185,000.
C is incorrect because it ignores the wall removal cost and capitalizes only the equipment cost of ($185,000) and rearrangement cost of $12,000 for a total cost of ($185,000 + $12,000 = $197,000).
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