Problem 53-4 (IFRS)Newcombe Company uses many kinds of machines in operations. Theentity acquires some machines from others and constructs somemachines itself.The following information pertains to a machine constructed by theentity:Cost of material to constructLabor costAllocated overhead costAllocated interest cost of financing machineCost of installationInsurance for one year700,000430,000220,000100,000120,00020,000150,00040,000Profit saved by self-constructionSafety inspection cost prior to useWhat total amount should be capitalized as cost of the machine?

A capitalized cost is a cost that is incurred from the purchase of a fixed asset that is expected to…

Newcombe Company uses many kinds of machines in operations. The entity acquires some machines from others and constructs some machines itself. The following information pertains to a machine constructed by the entity: Cost of material to construct Labor cost 700,000 430,000 220,000 100,000 120,000 20,000 150,000 40,000 Allocated overhead cost Allocated interest cost of financing machine Cost of installation Insurance for one year Profit saved by self-construction Safety inspection cost prior to use What total amount should be capitalized as cost of the machine?

Newcombe Company uses many kinds of machines in operations. The entity acquires some machines from others and constructs some machines itself. The following information pertains to a machine constructed by the entity: Cost of material to construct Labor cost 700,000 430,000 220,000 100,000 120,000 20,000 150,000 40,000 Allocated overhead cost Allocated interest cost of financing machine Cost of installation Insurance for one year Profit saved by self-construction Safety inspection cost prior to use What total amount should be capitalized as cost of the machine?

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

Problem 53-4 (IFRS)
Newcombe Company uses many kinds of machines in operations. The
entity acquires some machines from others and constructs some
machines itself.
The following information pertains to a machine constructed by the
entity:
Cost of material to construct
Labor cost
Allocated overhead cost
Allocated interest cost of financing machine
Cost of installation
Insurance for one year
700,000
430,000
220,000
100,000
120,000
20,000
150,000
40,000
Profit saved by self-construction
Safety inspection cost prior to use
What total amount should be capitalized as cost of the machine?

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