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During 2022, MinMin Co. purchased a second-hand machine at a price of P3,200,000. A cash payment of P500,000 was made and a two-year non-interest bearing note was issued for the balance. The cash price equivalent for similar machineries was at P 2,400,000. A new machine would cost P4,000,000. The following costs were incurred during the year: Cost of removing old machine that was replaced Cash proceeds from the sale of the old machine replaced General overhaul and repairs to condition machine prior to use Cost of spare parts to cover breakdowns Cost of installation Cost of testing machine prior to use, net of 10,000 proceeds from sale of samples Cost of hauling machine from vendor to entity premises Cost of repairing damage to machine caused when machine was dropped during installation Repairs incurred during first year of operations Safety device added to the machine Cost of training workers to operate the machine P 30,000 10,000 150,000 200,000 80,000 100,000 10,000 30,000 90,000 250,000 20,000 Compute the amount to be capitalized as cost of the machine.

During 2022, MinMin Co. purchased a second-hand machine at a price of P3,200,000. A cash payment of P500,000 was made and a two-year non-interest bearing note was issued for the balance. The cash price equivalent for similar machineries was at P 2,400,000. A new machine would cost P4,000,000. The following costs were incurred during the year: Cost of removing old machine that was replaced Cash proceeds from the sale of the old machine replaced General overhaul and repairs to condition machine prior to use Cost of spare parts to cover breakdowns Cost of installation Cost of testing machine prior to use, net of 10,000 proceeds from sale of samples Cost of hauling machine from vendor to entity premises Cost of repairing damage to machine caused when machine was dropped during installation Repairs incurred during first year of operations Safety device added to the machine Cost of training workers to operate the machine P 30,000 10,000 150,000 200,000 80,000 100,000 10,000 30,000 90,000 250,000 20,000 Compute the amount to be capitalized as cost of the machine.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During 2022, MinMin Co. purchased a second-hand machine at a price of P3,200,000. A cash payment of P500,000 was made and a two-year non-interest bearing note was issued for the balance. The cash price equivalent for similar machineries was at P 2,400,000. A new machine would cost P4,000,000. The following costs were incurred during the year: Cost of removing old machine that was replaced Cash proceeds from the sale of the old machine replaced General overhaul and repairs to condition machine prior to use Cost of spare parts to cover breakdowns Cost of installation Cost of testing machine prior to use, net of 10,000 proceeds from sale of samples Cost of hauling machine from vendor to entity premises Cost of repairing damage to machine caused when machine was dropped during installation Repairs incurred during first year of operations Safety device added to the machine Cost of training workers to operate the machine P 30,000 10,000 150,000 200,000 80,000 Compute the amount to be capitalized as cost of the machine. 100,000 10,000 30,000 90,000 250,000 20,000
Transcribed Image Text:During 2022, MinMin Co. purchased a second-hand machine at a price of P3,200,000. A cash payment of P500,000 was made and a two-year non-interest bearing note was issued for the balance. The cash price equivalent for similar machineries was at P 2,400,000. A new machine would cost P4,000,000. The following costs were incurred during the year: Cost of removing old machine that was replaced Cash proceeds from the sale of the old machine replaced General overhaul and repairs to condition machine prior to use Cost of spare parts to cover breakdowns Cost of installation Cost of testing machine prior to use, net of 10,000 proceeds from sale of samples Cost of hauling machine from vendor to entity premises Cost of repairing damage to machine caused when machine was dropped during installation Repairs incurred during first year of operations Safety device added to the machine Cost of training workers to operate the machine P 30,000 10,000 150,000 200,000 80,000 Compute the amount to be capitalized as cost of the machine. 100,000 10,000 30,000 90,000 250,000 20,000
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