Gsed a delivery van for his business through an online auction. his winning bid for the van was $27,750. in addition, jose incurred the following expenses before using the van: shipping costs of $1,100; paint to match the other fleet vehicles at a cost of $1,230; registration costs of $2,260, which included $2,050 of sales tax and an annual registration fee of $210; wash and detailing for $68; and an engine tune-up for $254.
what is jose's cost basis for the delivery van?

$30,900

Explanation:

Jose's cost basis would include only the cost necessary to make the delivery van available for use. This is also know as the basis for capitalization of the expenses. A review of the cost incurred;

Winning bid for the van $27,750. This is a necessary cost and forms a part of the cost basis. The shipping cost of $1,100 is also a necessary cost as the asset must be shipped to be available for use. The painting cost of $1,230 is not a necessary cost as the van would still be available for use even if not painted. The sales tax of $2,050 is key for the van purchase and as such is a part of the cost basis. Wash and detailing cost of $68 is an expense that does not form part of the cost basis as this has no effect on the value and useful life of the van. Engine tune up cost is a servicing cost that does not affect the useful life of the asset. As such, the cost basis

=

Cost basis is $30,900

answer///parietal;