Hamlet College recently purchased new computing equipment for its library. The following information refers to the purchase and installation of this equipment.

The list price of the equipment was $285,000; however, Hamlet College qualified for an education discount of $25,000. It paid $50,000 cash for the equipment, and issued a 3-month, 9% note payable for the remaining balance. The note, plus accrued interest charges of $4,500, was paid promptly at the notes maturity date.

In addition to the amounts described in 1, Hamlet paid sales taxes of $15,000 at the date of purchase.

Freight charges for delivery of the equipment totaled $1,000.

Installation costs related to the equipment amounted to $5,000.

During installation, one of the computer terminals was accidentally damaged by a library employee. It cost the college $500 to repair this damage.

As soon as the computers were installed, the college paid $4,000 to print admissions brochures featuring the librarys new, state-of-the-art computing facilities.

Instructions

1. In one sentence, make a general statement summarizing the nature of expenditures that qualify for inclusion in the cost of plant assets such as computing equipment.