Question
a. What is the formal definition in the glossary of the term Activities as it relates to property, plant & equipment? b. PFW Company is
b. PFW Company is constructing a specialized machine for use in manufacturing its product. Construction had been ongoing for several months when, on April 1, one of its suppliers experienced a labor strike. The materials purchased from this supplier at a cost of $50,000 were critical to the manufacture of the machine. In order to keep construction on schedule PWF opted to pay $100,000 to purchase the same materials on a rush order from another supplier. Based on the definition above, should PFW capitalize the full $100,000 of material cost to the machine, or should it capitalize only $50,000 and report the remaining $50,000 as an extraordinary loss?
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Economics
Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn
18th edition
978-0077413798, 0-07-336880-6, 77413792, 978-0-07-33688, 978-0073375694
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