A company purchased a special purpose machine on August 1 of the past year, and it was installed and ready to run on January 1 of this year. The following costs were incurred in the purchase and installation of the machine. Invoice price ---------------------------------------------------- AED 125,000 Sales tax----------------------------------------------------------AED 5250. Insurance charges----------------------------------------------- AED 1500 Adjustments to run the machine ------------------------------AED 160 Electrical and power connection charges ----------------- AED 220 Fines paid during the transport of the machinery------ AED 400 Damage repairs due to negligence of the worker----- AED 375 Compute the acquisition cost of the machinery. Do we take all or ignore few. If so why?
A company purchased a special purpose machine on August 1 of the past year, and it was installed and ready to run on January 1 of this year. The following costs were incurred in the purchase and installation of the machine. Invoice price ---------------------------------------------------- AED 125,000 Sales tax----------------------------------------------------------AED 5250. Insurance charges----------------------------------------------- AED 1500 Adjustments to run the machine ------------------------------AED 160 Electrical and power connection charges ----------------- AED 220 Fines paid during the transport of the machinery------ AED 400 Damage repairs due to negligence of the worker----- AED 375 Compute the acquisition cost of the machinery. Do we take all or ignore few. If so why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Topic Video
Question
A company purchased a special purpose machine on August 1 of the past year, and it was installed and ready to run on January 1 of this year. The following costs were incurred in the purchase and installation of the machine.
Invoice price ---------------------------------------------------- AED 125,000
Sales tax----------------------------------------------------------AED 5250.
Insurance charges----------------------------------------------- AED 1500
Adjustments to run the machine ------------------------------AED 160
Electrical and power connection charges ----------------- AED 220
Fines paid during the transport of the machinery------ AED 400
Damage repairs due to negligence of the worker----- AED 375
Compute the acquisition cost of the machinery. Do we take all or ignore few. If so why?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education