The following expenditures relating to plant assets were made by Watkens Company during the first 2 months of 2014. a. Paid $5,000 of accrued taxes at time plant site was acquired.
b. Paid $200 insurance to cover possible accident loss on new factory machinery while the machinery was in transit.
c. Paid $850 sales taxes on new delivery truck.
d. Paid $17,500 for parking lots and driveways on new plant site.
e. Paid $250 to have company name and advertising slogan painted on new delivery truck.
f. Paid $8,000 for installation of new factory machinery.
g. Paid $900 for one-year accident insurance policy on new delivery truck.
h. Paid $75 motor vehicle license fee on the new truck.

Required:
Explain the application of the historical cost principle in determining the acquisition cost of plant assets.