Question
Jumbo Electronics Company. acquired new machinery that will significantly reduce its energy costs for manufacturing. Costs incurred include: Cost of the new machinery (including $150,000
Jumbo Electronics Company. acquired new machinery that will significantly reduce its energy costs for manufacturing. Costs incurred include:
Cost of the new machinery (including $150,000 of refundable tax) $5,150,000
Transportation and set up cost 195,000
Trade discount received 250,000
Training course for staff in new machinery 180,000
Import duty on the new machinery 450,000
Initial testing cost of new machinery 300,000
Losses incurred while other parts of the factory shut down during testing the new machinery 130,000
Cost to dismantle the machinery after 15 years 165,000
Professional Fees paid to make the technology suitable 100,000
Proceeds from the sales of test-run products 167,000
Required: What is the total cost that can be capitalized as per IAS 16. [11 Marks]
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