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Determine the amount to be capitalized in the asset account

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Problem

Louisiana Logging Co. purchased an electronic saw to cut various types and sizes of logs. The saw had a list price of $160,000. The seller agreed to allow a 5 percent discount because Louisiana paid cash. Delivery terms were FOB shipping point. Freight cost amounted to $3,200. Louisiana had to hire an individual to operate the saw. Louisiana had to build a special platform to mount the saw. The cost of the platform was $2,500. The saw operator was paid an annual salary of $50,000. The cost of the company's theft insurance policy increased by $1,800 per year as a result of acquiring the saw. The saw had a five-year useful life and an expected salvage value of $25,000.

Required

Determine the amount to be capitalized in the asset account for the purchase of the saw.

Reference no: EM131799698

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