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What amount should be capitalized cost of the new machine

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Reference no: EM132794277

Reverend Company acquired a new processing machine at the beginning of the current year:

Invoice cost - terms 5/10, n/30 1,600,000

Cost of transportation 50,000

Cost of installation 50,000

Payment for strengthening the floor to support the weight of the new machine 150,000

The chief engineer spent two-thirds of his time during trial run of the new machine. The monthly salary is P60,000.

During the year, the entity was granted a cash allowance of P100,000 by the supplier because the machine proved to be less than standard performance capability.

The operator of the old machine who was laid off due to the acquisition of the new machine was paid a gratuity of P30,000.

Problem 1: What amount should be capitalized cost of the new machine?

Reference no: EM132794277

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