Avantika operates a coffee shop, Avantika Caf, with a financial year ending 30 June. On 1 July 2023, Avantika purchased a new coffee machine. The machine had a recommended retail price of $550,000. The caf appliances and furnishings cost $150,000. The delivery of the coffee machine cost $1,500, installation was $11,900 and a new cash registered was purchased at $6,000. All payments were paid in cash.

May I know the answer and how to calculate the cost to be capitalised? Please explain the reason! Thank you