Reference no: EM132811736
The following items relate to the acquisition of a new machine by Bongabon Corporation in 2020:
Invoice price of machinery P2,000,000
Cash discount not taken 40,000
Freight on new machine 10,000
Cost of removing the old machine 12,000
Loss on disposal of the old machine 150,000
Gratuity paid to operator of the old machine who was laid off 70,000
Installation cost of new machine 60,000
Repair cost of new machine damaged in the process of installation 8,000
Testing costs before machine was put into regular operation 15,000
Salary of engineer for the duration of the trial run 40,000
Operating cost during first month of regular use 250,000
Cash allowance granted because the new machine proved to be of inferior quality 100,000
Problem 1: How much should be recognized as cost of the new machine?
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How much should be recognized as cost of the new machine
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