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On October 12, 2020, Howard Co. incurred the following costs for one of its printing presses:
Purchase of attachment £55,000
Installation of attachment £5,000
Replacement parts for renovation of press £18,000
Labor and overhead in connection with renovation of press £7,000
Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity.
Problem 1: What amount of the costs should be capitalized?
Option 1: £85,000.
Option 2: £67,000.
Option 3: £78,000.
Option 4: £0.
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