Riverbed Co. recently installed some new computer equipment. To prepare for the installation, Riverbed had some...
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Riverbed Co. recently installed some new computer equipment. To prepare for the installation, Riverbed had some electrical work done in what was to become the server room, costing $19,100. The invoice price of the server equipment was $195,000. Three printers were also purchased at a cost of $2,190 each. The software for the system was an additional $47,800. The server equipment was believed to have a useful life of eight years, but due to the heavy anticipated usage, the printers were expected to have only a four year useful life. The software to run the system was estimated to require a complete upgrade in five years to avoid obsolescence. Additionally, it cost $11,300 for delivery. All of the above costs were subject to a 6% non-refundable provincial sales tax. During the installation, a training course was conducted for the staff that would be using the new equipment, at a cost of $9,500. Assume that Riverbed follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g., 80%, 6%, 14%). (b) Assume that Riverbed decides to capitalize the following components of the computer system: server equipment, printers, and software. Calculate the amount to be capitalized for each of these asset groups. (Round percentage to O decimal places, e.g. 52%. Round answers to 0 decimal places, e.g. 5,275.) Cost Server equipment Printers $4 Software Riverbed Co. recently installed some new computer equipment. To prepare for the installation, Riverbed had some electrical work done in what was to become the server room, costing $19,100. The invoice price of the server equipment was $195,000. Three printers were also purchased at a cost of $2,190 each. The software for the system was an additional $47,800. The server equipment was believed to have a useful life of eight years, but due to the heavy anticipated usage, the printers were expected to have only a four year useful life. The software to run the system was estimated to require a complete upgrade in five years to avoid obsolescence. Additionally, it cost $11,300 for delivery. All of the above costs were subject to a 6% non-refundable provincial sales tax. During the installation, a training course was conducted for the staff that would be using the new equipment, at a cost of $9,500. Assume that Riverbed follows IFRS, and that any allocation of common costs is done to the nearest 1% (e.g., 80%, 6%, 14%). (b) Assume that Riverbed decides to capitalize the following components of the computer system: server equipment, printers, and software. Calculate the amount to be capitalized for each of these asset groups. (Round percentage to O decimal places, e.g. 52%. Round answers to 0 decimal places, e.g. 5,275.) Cost Server equipment Printers $4 Software
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Server 230628 Printers 7770 Software 56534 Server Pr... View the full answer
Related Book For
Engineering Economic Analysis
ISBN: 9780195168075
9th edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle
Posted Date:
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