Wisdom Company installed a new equipment at the production facility and incurred the following costs: Cost of equipment per supplier's invoice Initial delivery and handling cost Cost of site preparation Consultants used for advice on the acquisition of equipment Interest charges paid to supplier for deferred credit Estimated dismantling cost to be incurred as required by contract 300,000 Operating losses before commercial production 400,000 What total amount should be capitalized as cost of the equipment? 2,500,000 200,000 600,000 700,000 200,000

Wisdom Company installed a new equipment at the production facility and incurred the following costs: Cost of equipment per supplier's invoice Initial delivery and handling cost Cost of site preparation Consultants used for advice on the acquisition of equipment Interest charges paid to supplier for deferred credit Estimated dismantling cost to be incurred as required by contract 300,000 Operating losses before commercial production 400,000 What total amount should be capitalized as cost of the equipment? 2,500,000 200,000 600,000 700,000 200,000

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

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Problem 53-3 (IFRS)
Wisdom Company installed a new equipment at the production facility
and incurred the following costs:
Cost of equipment per supplier's invoice
Initial delivery and handling cost
Cost of site preparation
Consultants used for advice on the acquisition of equipment
Interest charges paid to supplier for deferred credit
Estimated dismantling cost to be incurred as
required by contract
Operating losses before commercial
production
What total amount should be capitalized as cost of the equipment?
2,500,000
200,000
600,000
700,000
200,000
300,000
400,000

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