Question E10.4

Compute the total cost for each of these two types of equipment. If an item is not capitalized as a cost of the equipment, indicate how it should be reported.

E10.4 (LO1,2) (Purchase and Self-Constructed Cost of Assets) Dane ASA both purchases and con- structs various equipment it uses in its operations. The following items for two different types of equip- ment were recorded in random order during the calendar year 2019 Purchase Cash paid for equipment, including sales tax of E5,000 Freight and insurance cost while in transit E105,000 Cost of moving equipment into place at factory 2,000 Wage cost for technicians to test equipment 3,100 Insurance premium paid during first year of operation on this equipment 6,000 Special plumbing fixtures required for new equipment 1,500 Repair cost incurred in first year of operations related to this equipment 8,000 1,300 Construction Material and purchased parts (gross cost $200,000; failed to take 1% cash discount) E200,000 Imputed interest on funds used during construction (share financing) 14,000 Labor costs 190,000 Allocated overhead costs (fixed-E20,000; variable-E30,000) 50,000 Profit on self-construction 30,000 Cost of installing equipment 4,400 Instructions Compute the total cost for each of these two types of equipment. If an item is not capitalized as a cost of the equipment, indicate how it should be reported. E10.5 (LO1,2) (Treatment of Various Costs) Allegro Supply pic, a newly formed company, in- curred the following expenditures related to Land, to Buildings, and to Equipment. f 520 Abstract company's fee for title search 3,170 92,000 Architect's fees Cash paid for land and dilapidated building thereon $20,000 5,500 14,500 Removal of old building 7,400 Less: Residual value 19,000 Interest on short-term loans during construction 65,000 1.340