In January, Prahbu purchased a new machine for use in an existing production line of his...
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In January, Prahbu purchased a new machine for use in an existing production line of his manufacturing business for $85,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,950 to install the machine, and after the machine is installed, he pays $1,600 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $3,900 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine? Cost basis In January, Prahbu purchased a new machine for use in an existing production line of his manufacturing business for $85,000. Assume that the machine is a unit of property and is not a material or supply. Prahbu pays $2,950 to install the machine, and after the machine is installed, he pays $1,600 to perform a critical test on the machine to ensure that it will operate in accordance with quality standards. On November 1, the critical test is complete, and Prahbu places the machine in service on the production line. On December 3, Prahbu pays another $3,900 to perform periodic quality control testing after the machine is placed in service. How much will Prahbu be required to capitalize as the cost of the machine? Cost basis
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All those costs are capitalised which are incurred ... View the full answer
Related Book For
Taxation Of Individuals 2017
ISBN: 9781259548666
8th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
Posted Date:
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