Question: On 1 October 2018 Starring Co acquired a machine under the following terms. Cost 90,000 Trade discount (applying to cost only) 10% Freight charges

On 1 October 2018 Starring Co acquired a machine under the following terms. Cost 90,000 Trade discount (applying to cost only) 10% Freight charges 5,000 Electrical installation cost 2,000 Staff training in use of machine 6,000 Pre-production testing 3,000 Purchase of a three-year maintenance contract 8,000 On 1 October 2020 Starring Co decided to upgrade the machine by adding new components at a cost of 20,000. This upgrade led to a reduction in the production time per unit of the goods being manufactured using the machine. How should the 20,000 worth of new components be accounted for?

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