Columbia SA, which manufactures machine tools, had the following transactions related to plant assets in 2022.

Asset A: On June 2, 2022, Columbia purchased a stamping machine at a retail price of 12,000. Columbia paid 6% sales tax on this purchase. Columbia paid a contractor 2,800 for a specially wired platform for the machine, to ensure non-interrupted power to the machine. Columbia estimates the machine will have a 4-year useful life, with a residual value of 2,000 at the end of 4 years. The machine was put into use on July 1, 2022.

Asset B: On January 1, 2022, Columbia signed a fixed-price contract for construction of a warehouse facility at a cost of 1,000,000. It was estimated that the project will be completed by December 31, 2022. On March 31, 2022, to finance the construction cost, Columbia borrowed 1,000,000 payable April 1, 2023, plus interest at the rate of 10%. During 2022, Columbia made deposit and progress payments totaling 750,000 under the contract. The excess borrowed funds were invested in short-term securities, from which Columbia realized investment revenue of 13,000. The warehouse was completed on December 31, 2022, at which time Columbia made the final payment to the contractor. Columbia estimates the warehouse will have a 25-year useful life, with a residual value of 20,000.

Columbia uses straight-line depreciation and employs the half-year convention in accounting for partial-year depreciation. (Under this straight-line approach, a half-year of depreciation is recorded in the first and last year of the assets useful life.) Columbias fiscal year ends on December 31.

Instructions

At what amount should Columbia record the acquisition cost of the machine?

What amount of borrowing cost should Columbia include in the cost of the warehouse?

On July 1, 2024, Columbia decides to outsource its stamping operation to Medek Group. As part of this plan, Columbia sells the machine (and the platform) to Medek for 7,000. What is the impact of this disposal on Columbias 2024 income before taxes?