P$8-1.$ PPE capitalization $($L$.$O$.8-1)($Easy $15$ minutes$)$

Steve Manufacturing Limited $($SML$)$ purchased a large lathe. The invoice cost of the lathe was $$5,500,000$ but SML was able to reduce the price to $$5,300,000.$ The seller provided terms whereby if the entire amount was paid within $30$ days a further discount of $1\%$ was available. SML paid on the $25$th day. The machine was transported a long distance, costing SML $$75,000.$ Insurance while in transit was $$15,000.$ To encourage SML to purchase another machine, the manufacturer gave the company a $$50,000$ discount voucher on its next purchase of a similar machine. Workers were paid $$60,000$ to install the machine. Start$-$up and testing costs were $$35,000.$ Unfortunately, during the installation, one of the workers accidently damaged the machine and it cost $$40,000$ to repair the damage. Sales tax paid was $$500,000.$ A sales tax rebate of $$45,000$ was received relating to this transaction. During installation, part of the plant had to be shut down; lost profit from the shutdown was $$100,000.$

Required:

For each expenditure, identify whether it should be included in the cost of the lathe or expensed. Briefly justify each of your responses.