When a business incurs labour cost in installing a fixed asset, the cost is treated as

lovelybenjamin

9 years ago

The correct answer is A, installation cost is a capital expenditure and must be added to the cost of asset in order to arrive at the total cost of the asset, the total amount is gotten and depreciation us apply on the total cost of asset I.E the cost plus installation cost. You can debit the asset account to add the installation cost to arrive at the total or bal B/d , then you credit ur depreiation

Eleng1

11 years ago

For me, the answer is C. Cos, you didn't purchase a new asset you are installing the fixed asset you already have. so, you are not be charge for a new asset rather, you are being charge for the installation.

matecoplus

9 years ago

When a business incurs labour cost in installing a fixed asset, the cost is

yeah because the labour was call for the installation of fixed asset which means under additional cost of installation it should be there is nothing like installation cost in which account

VirtuousPeace

10 years ago

I agree with A bt av bin thinkin,hw do u calc depreciatn on d asset if d cost of installatn is added to actual cost?

Any guru in d house

Halymarich

9 years ago

The answer is A. Any additional cost incurred in the purchase of fixed asset is refers to as capital expenditure.

Teejaytemzy

13 years ago

Yea,the answer is definately A, coz d additional cost of installin da asset has 2 be added 2 da value of da asset which equals the net book value of da new asset.

sosbiopic

12 years ago

Dear, u r correct but it's not Net Book Value. It's the Cost of d asset.