Topic: Determining the cost of acquisition Level of difficulty: Moderate Gibbons Co., a coffee shop,

Topic: Determining the cost of acquisition Level of difficulty:
Moderate Gibbons Co., a coffee shop, purchases a new coffee machine. The
machine list price is 1,500 CU. However, the manufacturer is running a special
offer, and Gibbons Co. obtains the machine for a price which is 20 percent
lower than the list price. Freight expenses for the delivery of the machine are
150 CU. Installation and testing expenses amount to 100 CU. During
installation, uninsured damages are incurred resulting in repair expenses on
the machine of 200 CU. Training the baristas in the use of the new machine

Topic: Determining the cost of acquisition Level of difficulty:
Moderate Gibbons Co., a coffee shop, purchases a new coffee machine. The
machine list price is 1,500 CU. However, the manufacturer is running a special
offer, and Gibbons Co. obtains the machine for a price which is 20 percent
lower than the list price. Freight expenses for the delivery of the machine are
150 CU. Installation and testing expenses amount to 100 CU. During
installation, uninsured damages are incurred resulting in repair expenses on
the machine of 200 CU. Training the baristas in the use of the new machine
represented a cost of 75 CU.

Required

1 Compute the acquisition cost of the machine.

2 Record the acquisition in the format of your choice
(‘ledger-financial statements’, ledger, journal, financial statements).