DAC Manufacturing Inc. is installing a new plant at its production facility. It has incurred these costs:
Cost of the manufacturing plant
(cost per supplier's invoice plus taxes) ........... $2,500,000
Initial delivery and handling costs ............ 200,000
Cost of site preparation ................. 600,000
Consultants used for advice on the acquisition of the plant ... 700,000
Interest charges paid to supplier of plant for deferred credit .. 200,000
Estimated dismantling costs to be incurred after seven years ... 300,000
Operating losses before commercial production ........ 400,000
Instructions
Determine which costs DAC Manufacturing Inc. can capitalize in accordance with IAS 16.