1. On 1st January, 2019, Fan Milk Ltd. acquired a machine under the following terms for...

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1. On 1st January, 2019, Fan Milk Ltd. acquired a machine under the following terms for commercial production. GHC Manufacturer's base price 2,000,000 Trade discount (applying to base price only) 15% Early settlement discount taken (on the payable amount of the base cost only) 8% Freight charges 50,000 Electrical installation cost 40,000 Staff training in use of machine 100,000 Pre-production testing 30,000 LECTURERS: Dr. Cletus Agyenim-Boateng, Mr. Franklin Owusu Asafo-Adjei Purchase of a three-year maintenance contract 90,000 Consultants used for advice on the acquisition of the Machine 70,000 Operating losses before commercial production 80,000 Interest charges paid to supplier of plant for deferred credit 20,000 Estimated dismantling costs to be incurred after 10 years 30,000 i. What amount should be recognised under IAS 16: Property, Plant and Equipment as the cost of the machine? 4 marks ii. Give reasons for any item you will exclude from the computation of the cost of the machine. 2 marks 1. On 1st January, 2019, Fan Milk Ltd. acquired a machine under the following terms for commercial production. GHC Manufacturer's base price 2,000,000 Trade discount (applying to base price only) 15% Early settlement discount taken (on the payable amount of the base cost only) 8% Freight charges 50,000 Electrical installation cost 40,000 Staff training in use of machine 100,000 Pre-production testing 30,000 LECTURERS: Dr. Cletus Agyenim-Boateng, Mr. Franklin Owusu Asafo-Adjei Purchase of a three-year maintenance contract 90,000 Consultants used for advice on the acquisition of the Machine 70,000 Operating losses before commercial production 80,000 Interest charges paid to supplier of plant for deferred credit 20,000 Estimated dismantling costs to be incurred after 10 years 30,000 i. What amount should be recognised under IAS 16: Property, Plant and Equipment as the cost of the machine? 4 marks ii. Give reasons for any item you will exclude from the computation of the cost of the machine. 2 marks

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i Calculation of the amount that should be recognized as the cost of the machine Particulars Amount ... View the full answer