A mining project requires the purchase of new drilling equipment at a cost of $69750. A further $31500 will be spent on transport, installation and initial maintenance of the equipment, at the very beginning of the project. Of this amount, 35% constitutes maintenance costs and will be written off in Year 1, and the remainder will be capitalised. Excluding depreciation, what is the amount that will be claimed as tax deduction in Year 1?

A mining project requires the purchase of new drilling equipment at a cost of $69750. A further $31500 will be spent on transport, installation and initial maintenance of the equipment, at the very beginning of the project. Of this amount, 35% constitutes maintenance costs and will be written off in Year 1, and the remainder will be capitalised. Excluding depreciation, what is the amount that will be claimed as tax deduction in Year 1?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter19: Capital Investment

Section: Chapter Questions

Problem 18E

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