Harris Ltd also recently imported an artificial intelligent machinery and incurred the following costs: $ List price (trade discount 12.5% on list price) 480,000 Haulage costs 5,500 Pre-production testing of machinery 25,000 Repair & maintenance contract for three years 48,000 Running of electrical cable for machinery 28,000 Special foundation for mounting machinery 9,000 Labor costs (direct) 15,000 Harris Ltd paid for the machinery within four weeks of the order, therefore, obtained an early settlement discount of 3%. Harris Ltd had wrongly specified the power loading of the original electrical cable to be installed by the contractor. The cost of rectifying this error of $12,000 is included in the above figure of $28,000. The machinery is expected to have a useful life of 20 years. At the end of this period there will be compulsory costs of $30,000 to dismantle the machinery and $6,000 to restore the site to the original condition. Required: Determine the capitalized value of the artificial intelligent machinery in the financial statements of Harris Ltd. Explain the treatment in the financials to be given to any cost or item not utilized in computing the capitalized value of the machinery.
Harris Ltd also recently imported an artificial intelligent machinery and incurred the following costs:
$
List price (trade discount 12.5% on list price) 480,000
Haulage costs 5,500
Pre-production testing of machinery 25,000
Repair & maintenance contract for three years 48,000
Running of electrical cable for machinery 28,000
Special foundation for mounting machinery 9,000
Labor costs (direct) 15,000
Harris Ltd paid for the machinery within four weeks of the order, therefore, obtained an early settlement discount of 3%.
Harris Ltd had wrongly specified the power loading of the original electrical cable to be installed by the contractor. The cost of rectifying this error of $12,000 is included in the above figure of $28,000.
The machinery is expected to have a useful life of 20 years. At the end of this period there will be compulsory costs of $30,000 to dismantle the machinery and $6,000 to restore the site to the original condition.
Required:
Determine the capitalized value of the artificial intelligent machinery in the financial statements of Harris Ltd. Explain the treatment in the financials to be given to any cost or item not utilized in computing the capitalized value of the machinery.
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