A capital acquisitions manager recently purchased equipment needed to begin production of new inventory. The listed purchase cost of the equipment from a vendor was $70,000. In addition, six other costs related to the equipment were incurred at the time of acquisition and in the first month of operations. These six related costs are displayed in the illustration Purchase Cost of Equipment and Six Related Costs Total = $110,000 Purchase Cost $70,000
1. Sales Tax $5,600
2. Shipping and Handling $6,200
3. Installation and Preparation $12,700
Purchase Cost of Equipment and Six Related Costs Total = $110,000
Purchase Cost $70,000
1. Sales Tax $5,600
2. Shipping and Handling $6,200
3. Installation and Preparation $12,700
4. Testing and Safety Inspection $8,400
5. Employee Training for Operations
5. Employee Training for Operations $5,500
6. Maintenance for First Month of Operations $1,600
Required:
1. Which costs represent normal costs that are necessary to get the asset in condition and location for its intended use?
2. Which costs typically would be related to operating the equipment once it's in use?
3. Record the summary entry for the $110,000 of expenditures related to the equipment (Assume all costs were paid in cash Employee training is incurred through salary costs.)

Exercise 18-15 sheffield appliance center is an experienced home appliance dealer. sheffield appliance center also offers a number of services for the home appliances that it sells. assume that sheffield appliance center sells ovens on a standalone basis. sheffield appliance center also sells installation services and maintenance services for ovens. however, sheffield appliance center does not offer installation or maintenance services to customers who buy ovens from other vendors. pricing for ovens is as follows. oven only $790 oven with installation service 850 oven with maintenance services 970 oven with installation and maintenance services 990 in each instance in which maintenance services are provided, the maintenance service is separately priced within the arrangement at $180. additionally, the incremental amount charged by sheffield appliance center for installation approximates the amount charged by independent third parties. ovens are sold subject to a general right of return. if a customer purchases an oven with installation and/or maintenance services, in the event sheffield appliance center does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $790. assume that a customer purchases an oven with both installation and maintenance services for $990. (b) indicate the amount of revenue that should be allocated to the oven, the installation, and to the maintenance contract.