CBSE Class 11-commerce Answered
Why are bank charges paid for making a draft to buy MACHINERY not debited to MACHINERY a/c and to BANK CHARES A/c
Asked by payalmathur2006 | 10 Apr, 2020, 11:36: PM
Expert Answer
The total cost of an asset includes all expenses incurred up to the point the asset is ready for use such as freight expenses and installation charges. Therefore,
Total Cost of an Asset =Purchase Price+ Freight Expenses+ Installation Charges
Such total cost will not include the bank charges as such an amount is an expense for the company and therefore, shown separately as Bank Charges and not debited to Machinery/Asset Account.
Answered by Surabhi Gawade | 11 Apr, 2020, 11:37: AM
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