Corella Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the building. Provide a reason for your conclusions as per LKAS 16. Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine Freight costs and insurance to get the new machine to the factory Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine Cost of cooling equipment to assist in the efficient operation of the new machine Costs of repairing the factory door, which was damaged by the installation of the new machine Training costs of workers who will use the machine
Corella Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the building. Provide a reason for your conclusions as per LKAS 16. Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine Freight costs and insurance to get the new machine to the factory Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine Cost of cooling equipment to assist in the efficient operation of the new machine Costs of repairing the factory door, which was damaged by the installation of the new machine Training costs of workers who will use the machine
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Corella Ltd has acquired a new machine which it has had installed in its factory. Assess which of the following items should be capitalised into the cost of the building. Provide a reason for your conclusions as per LKAS 16.
Labour and travel costs for managers to inspect possible new machines and for negotiating for a new machine
- Freight costs and insurance to get the new machine to the
factory - Costs for renovating a section of the factory, in anticipation of the new machine’s arrival, to ensure that all the other parts of the factory will have easy access to the new machine
- Cost of cooling equipment to assist in the efficient operation of the new machine
- Costs of repairing the factory door, which was damaged by the installation of the new machine
- Training costs of workers who will use the machine
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