How much should be recognized as cost of the new machine?₱ 1,993,000₱ 1,930,000₱ 1,985,000₱ 2,025,000 Invoice price of machinery2,000,000Cash discount not taken40,000Freight on new machine10,000Cost of removing the old machine12,000Loss on disposal of the old machineGratuity paid to operator of the old machine whowas laid off150,00070,000Installation cost of new machine60,000Repair cost of new machine damaged in theprocess of installationTesting costs before machine was put into regular8,000operation15,000Salary of engineer for the duration of the trial run40,000Operating cost during first month of regular useCash allowance granted because the new machineproved to be of inferior quality250,000100,000

Cost of assets: The cost of an asset is not mere the list price but includes many other items too…

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Accounting

How much should be recognized as cost of the new machine? ₱ 1,993,000

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

How much should be recognized as cost of the new machine?

₱ 1,993,000

₱ 1,930,000

₱ 1,985,000

₱ 2,025,000

Invoice price of machinery
2,000,000
Cash discount not taken
40,000
Freight on new machine
10,000
Cost of removing the old machine
12,000
Loss on disposal of the old machine
Gratuity paid to operator of the old machine who
was laid off
150,000
70,000
Installation cost of new machine
60,000
Repair cost of new machine damaged in the
process of installation
Testing costs before machine was put into regular
8,000
operation
15,000
Salary of engineer for the duration of the trial run
40,000
Operating cost during first month of regular use
Cash allowance granted because the new machine
proved to be of inferior quality
250,000
100,000

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