question archive On October 10, 20X1 Black Company purchased a new machine
On October 10, 20X1 Black Company purchased a new machine
Subject:AccountingPrice:2.87 Bought7
On October 10, 20X1 Black Company purchased a new machine. The company paid $300,000 in cash. It also cost Black $8,000 to have the equipment delivered, $3,000 for a one-year insurance policy and $40,000 to install and calibrate the equipment. How much will be capitalized to the machinery account?
A) $348,000
B) $310,000
C) $308,000
D) $340,000
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Ans- Option A
As per relevant IFRS, any cost incurred to bring a fixed asset to bring to intended position shall be capitalized in books of accounts.
Total cost to be capitalized
Purchase cost=$300000
Freight in=$8000
Installation cost=$40000
Total cost capitalized=$348000
