PROBLEM 8: Repertoire Company acquired a machine and incurred the following costs: Cash paid for machine, including VAT of P96,000 896,000 Cost of transporting machine 30,000 Labor cost of installation by expert fitter 50,000 Labor cost of testing machine 40,000 Insurance cost for the current year 15,000 Cost of training for personnel who will use the machine 25,000 Cost of safety rails and platform surrounding machine 60,000 Cost of water device to keep machine cool 80,000 Cost of adjustment to machine to make it operate more efficiently 75,000 Estimated dismantling cost to be incurred as required by contract 65,000 What total amount should be capitalized as cost of the equipment?

PROBLEM 8: Repertoire Company acquired a machine and incurred the following costs: Cash paid for machine, including VAT of P96,000 896,000 Cost of transporting machine 30,000 Labor cost of installation by expert fitter 50,000 Labor cost of testing machine 40,000 Insurance cost for the current year 15,000 Cost of training for personnel who will use the machine 25,000 Cost of safety rails and platform surrounding machine 60,000 Cost of water device to keep machine cool 80,000 Cost of adjustment to machine to make it operate more efficiently 75,000 Estimated dismantling cost to be incurred as required by contract 65,000 What total amount should be capitalized as cost of the equipment?

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Description: PROBLEM 8: Repertoire Company acquired a machine and incurred the following costs:Cash paid for machine, including VAT of P96,000896,000Cost of transporting machine30,000Labor cost of installation by expert fitter50,000Labor cost of testing machine4

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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Concept explainers

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.

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Question

PROBLEM 8: Repertoire Company acquired a machine and incurred the following costs:
Cash paid for machine, including VAT of P96,000
896,000
Cost of transporting machine
30,000
Labor cost of installation by expert fitter
50,000
Labor cost of testing machine
40,000
Insurance cost for the current year
15,000
Cost of training for personnel who will use the machine
25,000
Cost of safety rails and platform surrounding machine
60,000
Cost of water device to keep machine cool
80,000
Cost of adjustment to machine to make it operate more efficiently
75,000
Estimated dismantling cost to be incurred as required by contract
65,000
What total amount should be capitalized as cost of the equipment?

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