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16 September, 01:01

A company purchased new equipment for $47,000. The company paid cash for the equipment. Other costs associated with the equipment were: transportation costs, $2,900; sales tax paid $3,700; and installation cost, $3,300. The cost recorded for the equipment was:

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  1. 16 September, 01:05
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    the cost recorded for the equipment was: $46,600

    Explanation:

    Cost of a Property, Plant and Equipment item in terms of IAS 16 includes the Purchase price and any directly attributable cost of bringing the asset in the location and condition required by managers to operate.

    But exclude refundable purchase taxes such as value added tax or sales tax.

    Calculation of Cost of Equipment:

    Purchase Price $47,000

    Add Transport cost $2,900

    Less Sales tax ($3,300)

    Cost of Equipment $46,600

    Conclusion:

    Thus the cost recorded for the equipment was: $46,600
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