Question
Dasmarias Company has a production assembly line to manufacture furniture. In 2016 Dasmarias purchased a new machine and rearranged the assembly line to install this
Dasmarias Company has a production assembly line to manufacture furniture. In 2016 Dasmarias purchased a new machine and rearranged the assembly line to install this machine. The rearrangement did not increase the estimated useful line of the assembly line but it did result in significantly more efficient production. The following expenditures were incurred in connection with this subject: Machine P5,000,000 Labor to install new machine 400,000 Parts added in rearranging assembly line to provide future benefits 2,000,000 Labor and overhead to rearrange the assembly line 600,000 What amount of the above expenditures should be capitalized in 2016? a. P8,000,000 b. P7,400,000 c. P5,400,000 d. P2,600,000
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