7. A business has recently expanded its production capacity by installing some additional machinery. The associated costs were as follows:

Cost of machinery 285,000

Delivery charges 27,000

Installation costs 25,000

Spare parts 68,000

Extended warranty 15,000

Import tax 21,000

The amount at which this machinery will be valued and shown in the Statement of Financial Position as its historical cost is:

A. 285,000

B. 358,000

C. 380,000

D. 441,000

8. A trader bought goods for resale on credit costing 1,000 in July and paid for them in August. These were sold on credit for 1,500 in September and the money received in October.

A. The costs were incurred in July, the revenue was earned in September, and the profit of

500 arose in September

B. The costs were incurred in August, the revenue was earned in October and the profit of

500 arose in October

C. The costs were incurred in October, the revenue was earned in October and the profit of

500 arose in October

D. There was a loss of 1,000 in August and a profit of 1,500 in October

9. Paul Company has an accounting year ended on 31 October. The company pays rent on its premises quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. The annual rent was 60,000 per year until 30 June 20X2 when it was increased to 72,000 per year as from 1 July 20X2.

The charge to the profit and loss account in respect of rent for the year ended 31 October 20X2 will be:

A. 54,000

B. 64,000

C. 65,000

D. 66,000