An entity acquired a machine and incurred the following costs: Cash paid for machine, including VAT of 896,000 96,000 Cost of transporting machine 30,000 Cost of installation 50,000 Cost of testing machine 40,000 Cost of safety rails and platform surrounding 60,000 machine Cost of water device to keep machine cool 80,000 Cost of adjustment to machine to make it 75,000 operate more efficiently Cost of repairing damage during installation 45,000 Cost of spare parts to cover breakdowns 155,000 Estimated dismantling cost to be incurred as 65,000 required by contract Insurance cost for the current year 15,000 Cost of training personnel who will use the 25,000 machine What total amount should be capitalized as cost of the machine?

An entity acquired a machine and incurred the following costs: Cash paid for machine, including VAT of 896,000 96,000 Cost of transporting machine 30,000 Cost of installation 50,000 Cost of testing machine 40,000 Cost of safety rails and platform surrounding 60,000 machine Cost of water device to keep machine cool 80,000 Cost of adjustment to machine to make it 75,000 operate more efficiently Cost of repairing damage during installation 45,000 Cost of spare parts to cover breakdowns 155,000 Estimated dismantling cost to be incurred as 65,000 required by contract Insurance cost for the current year 15,000 Cost of training personnel who will use the 25,000 machine What total amount should be capitalized as cost of the machine?

Name: An entity acquired a machine and incurred the following costs:Cash pa
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Description: An entity acquired a machine and incurred the following costs:Cash paid for machine, including VAT of896,00096,000Cost of transporting machineCost of installation30,00050,000Cost of testing machine40,000Cost of safety rails and platform surrounding6

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 19E

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12. Alvin Company acquired a machine and incurred the following costs: Cash paid for machine, including VAT of P96,000 Cost of transporting machine Cost of installation 896,000 30,000 50,000 Cost of testing machine Cost of safety rails and platform surrounding machine Cost of water device to keep machine cool Cost of adjustment to machine to make it operate more efficiently Cost of repairing damage during installation Cost of spare parts to cover breakdowns Estimated dismantling cost to be incurred as required by contract Insurance cost for the current year Cost of training personnel who will use the machine What total amount should be capitalized as cost of the machine? 40,000 60,000 80,000 75,000 45,000 155,000 65,000 15,000 25,000 A. 1,400,000 B. 1,296,000 C. 1,200,000 D. 1,160,000
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During the current fiscal year, Heinrich Corp. incurred the following costs related to property, plant, and equipment: Amount paid to the contractor for the building constructed P13,000,000 Building permit fee 120,000 Excavation cost 110,000 Architect fee 440,000 Interest that would have been earned had the money used during the period of construction been invested in the money market 330,000 Invoice cost of machine acquired, terms 3/10, n/30 6,500,000 Freight, unloading and delivery charges for machine acquired 100,000 Custom duties and other charges 270,000 Allowance and hotel accommodation, paid to foreign technicians during installation and test run of machine 520,000 Royalty payment on machines purchased (based on units produced and sold) 240,000 Cash paid for the purchase of land (none was allocated to old building) 10,000,000 Mortgage assumed on the land purchased 2,100,000 Realtor’s commission 650,000 Legal fees, realty taxes and documentation expenses 900,000 Amount…
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Vermont Company acquired a machine at the beginning of the current year. Cash paid for machine, including VAT of P96,000 P896,000 Cost of transporting machine 30,000 Labor cost of installation by expert fitter 50,000 Labor cost of testing machine 40,000 Insurance cost for the current year 15,000 Cost of training for personnel who will use the machine 25,000 Cost of safety rails and platform surrounding machine 60,000 Cost of water device to keep machine cool 80,000 Cost of adjustment to machine to make it operate more efficiently 75,000 Estimated dismantling cost to be incurred as required by contract 65,000 What total amount should be capitalized as cost of the machine? 1,231,000 1,200,000 1,135,000 1,150,000
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