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Jom Kawen Enterprise produces custom made door gifts for weddings. Due to increase in demand, Jom Kawen Enterprise wanted to purchase a machine from Heavy
- Jom Kawen Enterprise produces custom made door gifts for weddings. Due to increase in demand, Jom Kawen Enterprise wanted to purchase a machine from Heavy Machine Sdn Bhd based on the information provided below:
| RM |
Purchase price | 95,000 |
Installation cost | 1,500 |
Transportation cost | 3,000 |
Inspection staff | 500 |
Special lubricants for 3 years supplies | 1,200 |
An agreement was signed between Jom Kawen Enterprise and Heavy Machine Sdn Bhd to purchased the machine at cash. A discount of 10% of the purchase price was given by the Heavy Machine Sdn Bhd to Jom Kawen Enterprise.
The machine was fully operated on 12 August 2017. It is the companys policy to depreciate the machine at 10%, straight-line method monthly basis.
Required:
- Calculate the initial costs.
- Calculate the net carrying amount of the machine as at 31 December 2018.
- On 30 April 2019, the machine was struck by lightning. The lightning has caused severe damage to the machine. As a result, the machine cannot be repaired. Hence, the management wanted to scrap the machine.
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