SLEEPY company (a VAT-registeredcompany) paid P154,560, inclusive of 12%value added tax for its newly purchasedequipment. Other costs incurred relating tothis equipment are as follows: freight andinsurance cost while in transit, P5,000; costof moving equipment into place at factory,P2,000; fees paid to technician for testingthe equipment, P2,500; special plumbingfixtures required for new equipment, P1,800;insurance paid during the first year ofoperation, P1,500; maintenance costincurred during the first year of operation,2,500. What is the proper cost of theequipment?

The cost of equipment includes every type of cost related to equipment.

fixtures required for new equipment, P1,800; insurance paid during the first year of operation, P1,500; maintenance cost incurred during the first year of operation, 2,500. What is the proper cost of the equipment?

fixtures required for new equipment, P1,800; insurance paid during the first year of operation, P1,500; maintenance cost incurred during the first year of operation, 2,500. What is the proper cost of the equipment?

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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Question

SLEEPY company (a VAT-registered
company) paid P154,560, inclusive of 12%
value added tax for its newly purchased
equipment. Other costs incurred relating to
this equipment are as follows: freight and
insurance cost while in transit, P5,000; cost
of moving equipment into place at factory,
P2,000; fees paid to technician for testing
the equipment, P2,500; special plumbing
fixtures required for new equipment, P1,800;
insurance paid during the first year of
operation, P1,500; maintenance cost
incurred during the first year of operation,
2,500. What is the proper cost of the
equipment?

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