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0 Develop your understanding 5 Sephco plc has recently purchased an item of plant, the details of which are: Basic list price of plant 240,000 Trade discount applicable to Sephco 12.5% on list price Ancillary costs: Shipping and handling costs 2,750 Estimated preproduction testing 12,500 Maintenance contract for three years 24,000 Site preparation costs: Electrical cable installation 14,000 Concrete reinforcement 4,500 Own labour costs 7,500 Sephco paid for the plant (excluding the ancillary costs) within 4 weeks of order, thereby obtaining an early settlement discount of 3%. Sephco had incorrectly specified the power loading of the original electrical cable to be installed by the contractor. The cost of correcting this error of 6,000 is included in the figure of 14,000. The plant is expected to last for 10 years. At the end of this period there will be compulsory costs of 15,000 to dismantle the plant and 3,000 to restore the site to its original use condition. Assume a discount rate of 6%. Required: Calculate the amount at which the initial cost of the plant should be measured. 6 On 1 January 20X0 a company acquires a building for 336,000 and estimates its useful life as 12 years with a nil residual value. The company adopts the revalua- tion model for its property and on 1 January 20X2 and 1 January 20X7 undertakes 0 Develop your understanding 5 Sephco plc has recently purchased an item of plant, the details of which are: Basic list price of plant 240,000 Trade discount applicable to Sephco 12.5% on list price Ancillary costs: Shipping and handling costs 2,750 Estimated preproduction testing 12,500 Maintenance contract for three years 24,000 Site preparation costs: Electrical cable installation 14,000 Concrete reinforcement 4,500 Own labour costs 7,500 Sephco paid for the plant (excluding the ancillary costs) within 4 weeks of order, thereby obtaining an early settlement discount of 3%. Sephco had incorrectly specified the power loading of the original electrical cable to be installed by the contractor. The cost of correcting this error of 6,000 is included in the figure of 14,000. The plant is expected to last for 10 years. At the end of this period there will be compulsory costs of 15,000 to dismantle the plant and 3,000 to restore the site to its original use condition. Assume a discount rate of 6%. Required: Calculate the amount at which the initial cost of the plant should be measured. 6 On 1 January 20X0 a company acquires a building for 336,000 and estimates its useful life as 12 years with a nil residual value. The company adopts the revalua- tion model for its property and on 1 January 20X2 and 1 January 20X7 undertakes