How much should be recognized as the cost of the new machine? Show a solution.

The following items relate to the acquisition of a new machine by Mars Corp in 2020: Invoice price of the machinery - P2,000,000; Cash discount not taken - P40,000; Freight on new machine - P10,000; Cost of removing the old machine - P12,000; Loss on disposal of the old machine - P150,000; Gratuity paid to operator of the old machine who was laid off - P70,000;Installation cost of new machine - P60,000: Repair cost of new machine damaged in the process of installation - P8,000; Testing costs before machine was put into regular operation - P15,000; Salary of engineer for the duration of the trial run - P40,000; Operating cost during the first month of regular use - P250,000; Cash allowance granted because the new machine proved to be of inferior quality - P100,000. How much should be recognized as the cost of the new machine? "