Reference no: EM133133777

Question - RT Enterprise bought a machine on 1 January 20X4 for $1,000,000. The following expenditure is incurred;

Installation costs of $100,000.

Cost of storage for the machine of $50,000 as it was delivered before the factory floor is ready for installation.

Insurance of $150,000 were incurred as the management seek to reduce the risk of fire.

Expenses incurred to test the functionality of the installation.

Pre-production tests were carried out incurring $180,000. Meanwhile a revenue of $20,000 earned by RT Enterprise from the pre-production testing.

Cost incurred to launch the product manufactured by the machine amounting to $50,000.

Maintenance contract for the machine sign-up for the next three years amounting to $100,000.

The machine incurs a transportation cost of $80,000 to bring it to the factory.

Staff training costs to handle the machine amounted to $120,000.

Required - Determine the cost capitalized for the machine.