Wen Corp., located in Manitoba, both purchases and constructs various pieces of equipment that it uses in its operations. The following items are for two different pieces of
equipment and were recorded in random order during the calendar year 2014:
Purchase
Cash paid for equipment, including sales
tax of $7,000 and recoverable GST of $5,000 ...........$112,000
Freight and insurance cost while in transit ............. 2,000
Cost of moving equipment into place at factory .......... 3,100
Wage cost for technicians to test equipment ............. 4,000
Materials cost for testing ................... 500
Insurance premium paid on the equipment
for its first year of operation .................. 1,500
Special plumbing fixtures required for new equipment ...... 8,000
Repair cost on equipment incurred in first year of operations ..... 1,300
Cash received from provincial government
as incentive to purchase equipment ............... 25,000
Construction
Material and purchased parts (gross cost $200,000;
failed to take 2% cash discount) ............. $200,000
Imputed interest on funds used during
construction (equity/share financing) ........... 14,000
Labour costs ...................... 190,000
Overhead costs (fixed $20,000; variable $30,000) ........ 50,000
Profit on self-construction ................ 30,000
Cost of installing equipment ............... 4,400
Instructions
Calculate the total cost for each of these two pieces of equipment. If an item is not capitalized as an equipment cost, indicate how it should be reported.