Question

Snowsports Company operates a snowsports resort for skiers and snowboarders. The company has recently decided to replace an existing old chair lit with a new high speed quad chair and expand the hill to allow for increased capacity. The work was completed from April to November. Snow Sports incurred the following costs for the expansion:

Invoice price high- speed quad chair lift............. $ 3,000,000
Costs to dismantle old chair lift ................ 55,000
Cash received for sale used chair lift .............. 300,000
Shipping costs for delivery ................ 35,000
Landscape architect fees, grading expansion hill .......... 12,000
Permit costs ........................ 8,000
Clearing trees/ grading land for expansion ............ 85,000
Installation concrete bases for chair lift ............ 180,000
Helicopter rental to install towers for chair lift ......... 160,000
Labour installation ski lift .................. 500,000
Training employees on maintenance and operation ........ 15,000
Testing of chair lift ..................... 50,000
Interest costs loan for construction ............... 120,000
General overhead costs .................... 60,000
Annual routine maintenance ................. 90,000
Purchase tools required for annual maintenance ......... 150,000

Required:
1. Identify which of the costs listed above would be included in the cost of an item of property, plant, and equipment.
2. Identify if the costs would be included in land, ski lit, or tools.
3. Calculate the total costs for land, ski lit, and tools.



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  • CreatedFebruary 17, 2015
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