Dane ASA both purchases and constructs various equipment it uses in its operations. The following items for
Question:
Purchase
Cash paid for equipment, including sales tax of €5,000......................................€105,000
Freight and insurance cost while in transit.........................................................2,000
Cost of moving equipment into place at factory...................................................3,100
Wage cost for technicians to test equipment........................................................6,000
Insurance premium paid during first year of operation on this equipment.....................1,500
Special plumbing fixtures required for new equipment...........................................8,000
Repair cost incurred in first year of operations related to this equipment......................1,300
Construction
Material and purchased parts (gross cost €200,000; failed to take 1% cash discount)...€200,000
Imputed interest on funds used during construction (share financing) .......................14,000
Labor costs............................................................................................190,000
Allocated overhead costs (fixed-€20,000; variable-€30,000) ..............................50,000
Profit on self-construction............................................................................30,000
Cost of installing equipment..........................................................................4,400
Instructions
Compute the total cost for each of these two types of equipment. If an item is not capitalized as a cost of the equipment, indicate how it should be reported.
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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