Gomi Medical Labs, Inc. began operations five years ago producing a new type of instrument it hoped
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(a) In general, what costs should be capitalized for self-constructed equipment?
(b) Discuss whether the capitalized cost of self-constructed assets should include the following:
1. The increase in overhead that results from the company's own construction of its fixed assets
2. A proportionate share of overhead on the same basis as what is applied to goods that are manufactured for sale
(c) Discuss the proper accounting treatment of the $273,000 cost amount ($714,000- $441,000) that was higher for the first machine than the cost of the subsequent machines.
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Related Book For
Intermediate Accounting
ISBN: 978-0176509736
10th Canadian Edition, Volume 1
Authors: Donald Kieso, Jerry Weygandt, Terry Warfield, Nicola Young,
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