Question: Jojo Sdn Bhd ordered from Koko Sdn Bhd a piece of specialised heavy equipment for its operations. Details of cost incurred are: Jojo Sdn Bhd

Jojo Sdn Bhd ordered from Koko Sdn Bhd a piece of specialised heavy equipment for its operations.

Details of cost incurred are:

Jojo Sdn Bhd received a trade discount of 10% on list price and 5% cash discount on early settlement.

Jojo Sdn Bhd obtained a loan of RM500,000 to finance the purchase. Interest expense on the loan for the year was RM25,000.

The equipment has a useful life of 5 years. Jojo Sdn Bhd estimates that dismantling cost to be RM3,500 and legal obligation to restore the site is RM6,500. Both these values are stated in present values.

Required:

Calculate the initial cost of the plant. Your answer should explain the reasons why some of the costs are not included in the calculation.

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To calculate the initial cost of the plant for Jojo Sdn Bhd we need to consider the following costs and their respective treatments 1 List price The l... View full answer

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