A piece of equipment is acquired by an entity by issuing 10,000 shares of 10 par ordinary shares. The equipment has a list price of 150,000 and a trade discount of 10%. If paid in cash at the time of purchase, a 5% cash discount is allowed. The company’s ordinary shares are actively traded in a capital market with an average market price of 13 at the date of the exchange. What is the cost of the equipment? A. 130,000 B. 128,250 C. 150,000 D. 135,000

A piece of equipment is acquired by an entity by issuing 10,000 shares of 10 par ordinary shares. The equipment has a list price of 150,000 and a trade discount of 10%. If paid in cash at the time of purchase, a 5% cash discount is allowed. The company’s ordinary shares are actively traded in a capital market with an average market price of 13 at the date of the exchange. What is the cost of the equipment? A. 130,000 B. 128,250 C. 150,000 D. 135,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter15: Contributed Capital

Section: Chapter Questions

Problem 1MC

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A piece of equipment is acquired by an entity by issuing 10,000 shares of P10 par ordinary shares. The equipment has a list price of P150,000 and a trade discount of 10%. If paid in cash at the time of purchase, a 5% cash discount is allowed. The company’s ordinary shares are actively traded in a capital market with an average market price of P13 at the date of the exchange. What is the cost of the equipment?
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