How much is the initial cost of the equipment

Reference no: EM132817584

LOQUACIOUS TALKATIVE Co. acquired a factory equipment overseas on cash basis for ?400,000. Additional costs incurred include the following:

commissions paid to brokers for the purchase of the equipment, ?20,000;

import duties of ?100,000;

non-refundable purchase taxes of ?40,000;

freight cost of transferring the equipment to LOQUACIOUS' premises, ?4,000;

costs of assembling and installing the equipment, ?8,000;

costs of testing the equipment, ?6,000;

administration and other general overhead costs, ?16,800; and

advertisement and promotion costs of the new product to be produced by the equipment, ?15,200.

Problem 1: The samples generated from testing the equipment were sold at ?2,000. How much is the initial cost of the equipment?

a. 578,000

b. 594,800

c. 576,000

d. 592,800

Reference no: EM132817584

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